Globalstar, Inc. (OTCMKTS:GSAT) Still Hangs In There
Globalstar, Inc.(OTCMKTS:GSAT) is a rare occurrence in the world of pennystock companies. Initially it started as a Nasdaq listed company before being removed on December 31 for not meeting the $1.00 per share minimum bid requirement. Since then they have lived a second life in the OTC market and what a tumultuous life it has been. Back in February they got half way through to 1$ per share riding the hype around their 4th satellite launch but as the excitement subsided the ticker once again started sliding downwards.
During Friday’s trade session GSAT finally made some progress by jumping nearly 20% and closing at $0.35. Traded volume also showed one of its best performances for the year with more than 4 million shares changing owners.
The company is a provider of mobile satellite voice and data services and they recently put into orbit their second-generation of satellites, which should be fully operational by the end of the summer. Having a real business, a staff of 267 employees and boasting more than 500 thousand subscribers, GSAT is quite unlike most of the other OTC listed companies. Their financial results for 2012 make the differences even more glaring:
- $11 million cash
- $154 million total current assets
- $761 total current liabilities
- $76 million revenues
- $112 million net loss
But here we also find the one and only trait that GSAT and the average pennystock company have in common – the massive amount of debt. Despite its best efforts GSAT still hasn’t managed to turn a profit. The situation got even worse when on April 1 holders representing $70,654,000 principal amount of their 5.75% convertible senior notes exercised their purchase rights.
In addition, the company is also required to pay interest for the six months ended March 31, 2013 in the aggregate amount of $2,064,365. As GSAT doesn’t have the necessary funds it was successful in delaying the payment for almost a month but the last forbearance period ends today.
Another big concern for future investors should be the increase of the authorized shares of common stock to 1.6 billion, 400 million of which will be nonvoting. So the door for further dilution is now wide open.
GSAT is still far away from a positive bottom line and the conclusion of the negotiations with the note holders is nowhere in sight. A good sign is the absence of any bigger pumps but doing your own due diligence before committing to any deals is always a must.
