Guar Global Ltd (OTCMKTS:GGBL) Makes its First Steps in Pennyland

Guar Global Ltd (OTCMKTS:GGBL) has only two active sessions under its belt, but despite this, it still managed to get on the list of the most actively traded stocks after Wednesday’s closing bell. The price didn’t move much, but in just six and a half hours, the ticker managed to shift around 345 thousand shares meaning that the dollar volume stands at $225 thousand.

Not bad for a stock that was virtually dormant until a couple of days ago, but what’s going to happen next?

The non-existent trading history means that any predictions are going to be based on guesswork which is why, we decided to take a look into the company’s fundamentals and see what the chances of success are.

At the beginning of 2012, GGBL went under a different name and was, for all intents and purposes, a shell. For reasons that are not very well explained, the management team performed a stock split in February 2012, they increased the number of authorized shares in March 2012, and a few months later, changed the name to Guar Global. On July 31, 2013, GGBL acquired a privately-held company called Pure Guar India Private Limited and swapped the business plan.

Now, GGBL wants to implement new and clever techniques and strategies that should increase the production of guar – a crop which, after some processing, can be used to create a range of products for a variety of industries. Predictably, some new people were put at the helm and they said that they expect production to begin within the next six months.

The only problem is, GGBL‘s horrific financial situation might put a huge spanner in the works. The latest report is the annual one for the year ended July 31 and it contains the following figures:

• cash: $45,289
• current assets: $140 thousand
• current liabilities: $783 thousand
• no revenue since inception
• annual net loss: $497 thousand

It’s clear that they will need some cash if they are to start operations at all and probably that’s why, in August, GGBL entered into a loan agreement for a total of $200 thousand. Unfortunately, we can’t be sure if this sort of money will be enough but, perhaps more worryingly, the note can be converted into common stock at a rate of $0.25 per share. On the one hand, a potential conversion can cause some severe dilution, but on the other, it will present the note holders with an amazing opportunity for a profit in case the price remains steady.

And this brings us on to the question of stock promotions. Currently, there are no traceable campaigns running for the ticker but there’s no getting away from the fact that the whole set up looks like the perfect pump candidate. In addition to the name change, the stock split, and the interesting business plan, we can see from the SEC filings that back on January 24, 2008, the company completed an offering and sold 25.2 million (post-split) shares in exchange for just $42 thousand. We can’t be sure if the investors who got the stock are still holding on to it, but if they are, the profit opportunity at the current level of $0.66 per share is absolutely huge.

Probably that’s why, traders around message boards predict that a promotion is just around the corner. Of course, this is just speculation and we’ll need to wait for a little bit longer to see if a pump is indeed brewing. Even if it isn’t, proceeding with caution and doing a lot of due diligence is absolutely essential before putting any money on the line.