Stock Digest Report Are Not Finished with Global Security Agency Inc. (PINK:GSAG)

For the last few months there have been a few waves of emails by David Cohen, Stock Digest Report and a few other newsletters about Global Security Agency Inc. (PINK:GSAG). Yesterday, the same pumpers initiated a new campaign and we decided to see if it will be able to lift GSAG off the ground in the long run.

There are a number of factors that will decide whether this will happen or not and, unfortunately, things are not looking up from the very start. For one, if you have a look through the track records of the aforementioned promoters, you will see that nearly all of their pumps ended in disaster. What is interesting is that they are trying to use this fact in their favor.

Both Stock Digest Report and David Cohen tell us in their emails that they have alerted investors numerous times about GSAG and that their predictions of an increase in the price always turned out to be correct. Sure enough, a quick look at GSAG‘s chart from the last couple of months reveals that this was indeed the case. Every single time that we had emails from these pumpers, we saw GSAG gain some ground. What happened later, however, was not that pretty.

While the stock indeed rise during the pumps, it was purely because of the artificial hype created by the newsletters as well as the accompanying press releases. As soon as the excitement was over, however, the price fell like a rock and probably even now, a couple of months later, there are still some investors mourning the loss of their hard-earned cash. On the whole, we reckon that this is not something to brag about, but still, having in mind that the pumping machine is fired up once again, we could see one more brief peak.

It will be only a short term play, however. GSAG‘s financial statement suggests that they are in a deep financial mess right now and nobody knows when (if) they are going to get themselves out. One thing is for sure – the PR’s and emails won’t help at all. The figures found in their latest 10-Q for the third quarter of 2012 illustrate exactly what we mean and you can find them below:

• cash: $85 thousand
• current assets: $676 thousand
• current liabilities: $626 thousand
• quarterly revenue: $307
• quarterly net loss: $220 thousand

We’re still waiting to see the next report and GSAG recently informed us that they will be late with it, but having in mind the trend that they’ve been following lately, we’re more inclined to believe that it will look even worse than this one. The third quarter of 2011, for example yielded decent results in terms of revenue and they even registered a small income, whereas, as you can see from the figures above, 2012 was a disaster.

We also expect to see a much bigger number of outstanding shares in the next 10-Q. As we mentioned in our previous articles, issuance of stock has turned into something of a sport for GSAG and they are practicing it virtually constantly. The negative effect of all this, of course, remains with the shareholders whose investments are being crushed by the dilution

With all that in mind, the pumpers are telling us that GSAG‘s projected price for the next 12 months is $0.11 per share and they are basing these claims on a report written by Patrick Murphy, a financial analyst. Of course, Mr. Murphy has received a compensation totaling $6,500 for the two reports that he has done on GSAG, but our biggest worry is the fact that he has made similar statements for a lot of other penny stock companies and most of the charts reveal that he wasn’t exactly spot on with his predictions. On the right, you can see the performance of World Moto, Inc. f/k/a Net Profits Ten Inc (OTC:FARE) and Sunbelt Intl Corp (PINK:SUNB) for the last couple of months. Mr. Murphy did reports on these companies as well and, while optimistic, they turned out to have little in common with reality.

All in all, if the previous pumps are anything to go by, we should see a brief ascend in GSAG‘s price, however, all the facts above show that this is anything but a long-term investment option. Which, in turn, makes it very risky and you should be extremely careful when playing with it.