Kat Exploration Inc (OTCMKTS:KATX) Prepares Investors for a Bumpy Ride
“Transparency” is a word that many OTC Companies use and abuse. Yet, once you’ve been around penny stocks for long enough, you’ll realize that a large portion of the characters that stand behind said companies don’t seem to know what “transparency” actually is. Take Kat Exploration Inc (OTCMKTS:KATX) and its CEO, Ken Stead, as an example.
Back in April, he proudly announced through a press release that the number of authorized common shares is about to be reduced from over 2 billion to 750 million. The action was also accompanied by a Current Events Report – a filing that is not very common for a company that uses the alternative reporting standards.
Three months later, in July, Mr. Stead decided for some reason that KATX once again needs a bigger A/S count. The database at Nevada’s Secretary of State’s website shows that thanks to an amendment to the articles of incorporation the company is now allowed to issue up to 2 billion shares.
This time, there was no press release and no Current Events Report.
The deeper you look into KATX‘s history, the harder you’ll find it to trust your money with it. Over the years, Mr. Stead has made quite a few promises and projections about the future of the company and its shareholders. In January 2011, for example, he said that the stock should soon be up-listed from the Pink tier to the OTCQB level.
Right now, more than four and a half years later, KATX is still a pink sheet and it’s still using the Alternative reporting standards. The company headquarters looks like this while the latest financial statement is far from confidence-inspiring:
- cash: $3,926
- current assets: $4,826
- current liabilities: $93,929
- NO revenue
- quarterly net loss: $334,128
Not a whole lot to entice you into jumping in, you have to agree. And yet, despite the horrible balance sheet and the history of miserable failures, some people are still ready to trust KATX and Mr. Stead.
Yesterday, the company announced that it has acquired a car dealership specializing in second-hand Jeeps. Mr. Stead spruced up the press release with the usual dose of optimism, and as a result, investors went absolutely mad for the stock. They prized it off the bottom of the charts and they flung it 300% up to a close of $0.0004 per share.
You are the one to decide whether after years of failing to make good on his promises, Mr. Stead will finally be able to bring some value to KATX‘s shareholders. While you’re contemplating the risks, you might want to bear in mind that the stock has gone through quite a lot of dilution over the last few months.
The latest financial statement shows that on May 31, there were around 258 million shares issued and outstanding. A Schedule 13 form filed by Tangiers Investment Group LLC (an entity often associated with toxic debt among penny stock circles) suggests that a couple of weeks ago, the O/S count stood at around 591 million. According to the company profile, however, it has now grown to more than 625 million.
About twenty minutes after the opening bell, KATX is sitting at $0.0003 per share.
