Global Entertainment Holdings, Inc. (PINK:GBHL) is a Blockbuster According to Insane Stocks

It is no secret that penny stocks are inherently unpredictable and it’s extremely hard to know when they are going to blow the roof off and when they will come crashing down. Global Entertainment Holdings, Inc. (PINK:GBHL) proved that and astonished everyone yesterday when they soared a mind-boggling 828%. Do they deserve the price of $0.0650 per share though?

Well, GBHL is a movie producing company and as we all know people have been making billions out of this industry for decades. We also know that making even a low-budget motion picture requires some serious investment and it is anything but easy to turn a profit out of it, since even the big companies fail sometimes. Sure enough, GBHL‘s plans have also fallen through and their financial statements show us that while they have registered some revenues over the years, net profits are still in the realm of science fiction. The latest report covers the period before December 31, 2012 and we have summarized the most important financials below:

• cash: $20 thousand
• current assets: $99 thousand
• current liabilities: $1.1 million
• revenue: $50 thousand
• net loss: $32 thousand

One thing that catches the attention is that their latest filing contains nothing more than the financial statement – there is no mention of how many shares were issued during the period, no information on any new convertible notes and they have even skipped the company description. We had nothing left to do but to check out their older reports to see if they are any different.

We opened the 10-K covering the fiscal 2011 and, fortunately, it was a bit more informative. In there we see that in order to finance the production of their low-budget flicks, they had to borrow huge amounts of money over the years. As you might imagine, they weren’t able to pay them off which means that they have defaulted on a total of 10 (ten) notes. The interests are building as we speak and they add up to the already massive liabilities.

GBHL‘s financial woes did not start yesterday, either. They have been strapped for cash since the very beginning and at one point in 2004 they were even forced to perform a reorganization following a case in the U.S. Bankruptcy Court.

Back then the CEO of the company was Mr. Stanley Weiner and, as such, he has also been involved in another court case where he was alleged of fraud and misinformation. GBHL however, don’t seem too concern with Mr. Weiner’s past and he still acts as the CFO of the company.

The grim financial situation has, most likely, forced GBHL to have their office situated in one of the unassuming buildings you see in the picture on the right. We do understand that it’s no easy task running the company with a miniscule amount of money, but when you try to convince potential investors in the solidity of the venture, we don’t think that an office like this will do the job.

Insane Stocks were probably following GBHL‘s huge leap yesterday and just a few minutes after the closing bell, they sent out some emails saying how great a company GBHL is and distracting people from the dreadful financial reports. One thing that Insane Stocks don’t tell us is what happened the last time GBHL got pumped. We, however, remember it clearly. It happened in April 2012 and after gaining some ground which, by the way, is exactly what happened yesterday, GBHL broke down into a free fall. The magnitude of the drop was huge – during the pump, the stock reached around $0.10 per share, while until yesterday’s run, they were trading in the sub-penny field. If this happens once again, there will surely be some extremely angry investors which is why we would advise you to be extremely careful.