Pumpers Dig Out GNCP Capital, Inc. f/k/a Global National Communications Corp. (PINK:GNCP)

You know that sinking feeling when you know that there is no hope of success whatsoever? We’re pretty sure that people who have trusted and invested money in GNCC Capital, Inc. f/k/a Global National Communications Corp. (PINK:GNCP) are pretty familiar with it. Especially if hey have gone through GNCP‘s latest financial report. But are all shareholders in a grim mood right now?

We’ll get to that in a minute, but let’s start with the basics. GNCP are a mineral exploration company and they say that their primary aim is to find and dig out gold and silver from various mines and properties across North America. Apparently, they already have claims to several mining sites in the USA, but still, there is no operations and they even say that they have not embarked on the first stages of the exploration process. Why is that? Well, there could be numerous reasons, but the most important one is that they simply have no money. Here is a recap of their most important financials as of December 31, 2012:

• cash: $0
• total assets: $401 thousand
• total liabilities: $19 million
• revenue: $0
• net loss (Q4 of 2012): $301 thousand

The pumpers tell us that all their mining rights are now in place and that all that’s needed is for the diggers to start digging, but as you can see, it will be a tall order with this sort of money.

The next logical question is: “Since they are in such a deep mess, how did they manage to get hold of all those mining claims?”. Their quite lengthy (238 pages) quarterly report gives us the answer. The deals were completed in an extremely short period of time back in 2010 when they issued a staggering amount of notes for the total of $16.7 million and an even more scary number of shares – an aggregate of 176 million.

You don’t need to be a financial analyst to understand how devastating a dilution this was for the shareholders, but still, the management team did make an effort to protect the people’s investments for a while by restricting the newly issued shares for the first two years. Speaking of restricted shares, the management also owns quite a lot of stock that was issued around the time of the mineral rights acquisitions. Noble folk that the CEO and CFO are, they too had their shares restricted for the first two years.

That is indeed very considerate of them, but the restrictions should now be off and with little hope of operations in the foreseeable future, some people might be eager to get rid of their shares. The current pump that is founded on nothing but optimism and, of course, some rather tempting compensations, leads us to believe that this is exactly the case.

And we have seen the consequences of promotions for companies with doubtful future. Graphite Corp (PINK:GRPH) who are, by the way, also a mineral exploration company, got pumped by a host of promoters, among which was Buzz Stocks (now promoting GNCP) about 10 days ago. As you can see from the chart, that didn’t really help and GRPH continued its descend.