Globalstar, Inc. (PINK:GSAT) Taking a Plunge Once Again
We go through quite a lot of penny stock companies every day and it could get somewhat underwhelming when you see the same thing over and over again – very little in terms of assets, humongous liabilities, no cash, zero revenue… it could get a bit wearisome every once in while. With Globalstar, Inc. (PINK:GSAT) things are a little bit different.
They are actually quite a famous name and they provide a host of services in the satellite voice and data field. Unlike other penny stocks, they have more than one employee and scientists with white coats and very large brains work for them. So why are they on the OTC Bulletin Board?
Well, the problems for GSAT started from the very beginning. We managed to find a document in which we can read that they were actually blamed by some shareholders of misleading them with overly-optimistic press releases back in 2007. The PR’s promised a lot of things that never happened and, as a result, GSAT‘s share price plummeted.
Despite the proceedings, GSAT carried on, launched satellites, developed products and did all sorts of exciting things. They still continue to do them even today – their latest batch of satellites was sent into orbit back in February. So, what’s the problem? Why did they get delisted from NASDAQ back in December 2012 and why did they close yesterday’s trading session at just $0.27 per share?
Well, the whole thing is caused by the fact that they have been unable to generate a profit ever since the beginning. Try as they might, the losses have been mounting over the years and looking at the developing trends in their financial statements, we’re struggling to see how they will manage to keep their head above the water. Here are the figures as of December 31, 2012:
- cash: $11 million
- current assets: $154 million
- current liabilities: $761 million
- yearly revenue: $57 million
- yearly net loss: $112 million
Their situation is not made easier by the fact that according to the terms of one of the notes that they have issued, they needed to make a $70 million payment to it back on April 1. They managed to negotiate a forbearance, but the new deadline is April 15 and that’s just a couple of days away. All in all, things are not looking good.
Because of the tremendous amount of debt and GSAT‘s inability to pay it off, they recently announced that they will need to increase the number of authorized shares, which could be a sign that their stockholders are in for quite a lot of dilution. That said, this won’t be the a first for them.
As we mentioned in the previous article that we wrote on GSAT, they recently signed an agreement with Terrapin Opportunities, L.P. according to which, GSAT can issue up to $30 million worth of shares whenever Terrapin deem it necessary. That could mean that there is quite a lot of stock waiting to see the light of day in the very near future.
In conclusion, we can say that while they are indeed a serious company with huge resources compared to other penny stocks, if they are not able to turn things around and start making money out of their business, they will have some really hard time maintaining a good image in front of their shareholders and potential investors.
