Global Equity International Inc (OTCBB:GEQU) Wants to be Taken Seriously

Global Equity International Inc (OTCBB:GEQU) lost its OTCQB status at the beginning of the year when it was struggling to maintain a minimum bid price of at least $0.01 per share. The company remained an SEC filer, but it was nevertheless transferred over to the Pink sheets and it’s been there ever since.

Apparently, however, the management team reckon that this is not where GEQU belongs. They announced on Friday that they will be sure to file all the documents necessary to regain OTCQB listing. Before they can do that, however, GEQU needs to remain above the $0.01 mark for at least a month. So, can it?

Well, it’s certainly off to a good start. It managed to gain as much as 30% during Friday’s session and it headed into the long weekend with a price of $0.013 – the highest close since the beginning of the year. The volume was pretty decent as well which goes to show that people believe in the stock’s ability to stay calm at more than a penny per share. But aren’t they missing something?

Let’s open the 10-Q and see what’s what. GEQU‘s financials on June 30 looked like this:

• cash: $734
• current assets: $52,490
• current liabilities: $3,899,798
• quarterly revenues: $1,140,500
• quarterly net income: $372,802

Straight away, you can see that the balance sheet is horrendous, and once you delve deeper into the 10-Q, you’ll see that the lack of cash has led to the issuance of numerous toxic notes over the years. Not surprisingly, these have absolutely drowned GEQU in dilution.

If you want to get an idea of how bad things really are, you need to consider that between July 1 and August 6, a total of 74,859,795 shares saw the light of day as a conversion of debt at prices ranging from $0.00045 and $0.0007 per share. The vast number of shares and the absolutely ridiculous discount that the conversion rates represent at the moment mean that GEQU‘s near-term performance could be quite shaky.

Still, on the bright side, the management team said in the 10-Q that all of the convertible notes have now been retired and they vowed never to use the services of the toxic financiers again. But can they really keep their promise?

Well, the massive revenue growth and the net profit suggest that they might be able to do it. A closer look, however, could raise some eyebrows. If you read through the report thoroughly, you’ll see that more than three quarters of the revenue logged during Q2 came in the form of an equity stake in Duo World Inc. – a private company that, in case you’re wondering, was formed less than a year ago.

Will GEQU be able to turn the Duo World common and preferred shares into actual money? We’ll need to wait and see. In the meantime, treading carefully might not be such a bad call.