Tension Builds As VGTel Inc (OTCMKTS:VGTL) Fails To File On Time
VGTel Inc (OTCMKTS:VGTL)’s latest financial report is the annual one for the period that ended on March 31. It was published on July 1 and in one of the first paragraphs we read that “Our current website 360entertainmentandproductions [dot] com and our new website is currently under construction.“. VGTL‘s latest press release is dated August 13 and it informs us that their new corporate website was unveiled on July 23. The only problem is, the new website isn’t actually new at all. It’s located at the same exact domain – 360entertainmentandproductions [dot] com.
You might accuse us of nit-picking at this point, but what we just showed you is a discrepancy and if VGTL want to present themselves as a solid investment option, they will need to clear all the misunderstandings from their future reports.
And since we mentioned the future reports, we should point out that we were rather disappointed to find that VGTL‘s next 10-Q will not be out for a couple more days. The notification came out around 2PM on Wednesday and probably because of it, VGTL lost around 7% of its value during yesterday’s session. We’ve seen drops much more devastating than this one, but the fact that the trading volume was quite a lot bigger than the three month-average suggests that some of the shareholders might have decided to run away while they still can.
We can’t say that we can blame them. If you take a look at our previous article, you’ll see that VGTL doesn’t appear to be the most solid penny stock venture in terms of financials. Here’s a summary of the most important figures as of March 31 once again:
- cash: $30 thousand
- current assets: $37 thousand
- current liabilities: $549 thousand
- yearly revenue: $42 thousand
- yearly net loss: $3.3 million
- accumulated deficit: $5.1 million
Sure, when compared to the figures contained in the previous 10-K, you’ll see that some things have improved, but that doesn’t change the fact that the company has only one employee and no assurance that any revenues will be logged during the quarters to follow. As we mentioned, the $42 thousand registered during the fiscal 2012 came from a contract that is no longer effective.
On July 23 they said that they have completed what they called “negotiations for expansion” in the gaming industry, but since then they have provided no further details on the agreements that are supposedly intended to make them leaders in the online gaming business which means that we have absolutely no idea if any contracts are secured or not.
They did, however, publish a Schedule 13 form according to which, if Asher Enterprises, one of their creditors, were to convert all of their notes into common shares, they would own around 10% of VGTL. We’ve seen Asher’s name in the filings of many penny stock ventures and we know that they’re known among investors’ circles as toxic financing providers. Why is that a bad thing?
Take a look at the chart on the right. It belongs to Cereplast Inc (OTCMKTS:CERP) – a former NASDAQ company that got into a bit of a financial mess. Because of the lack of cash, they had to resort to toxic financing (in their case the creditor was called Magna Group) and their share price has plummeted over the last couple of months. According to CERP, Magna are to blame and they even say that they’re starting some legal proceedings, seeking financial compensation for the significant blows to the company credibility. We’ll see if VGTL is in for the same treatment, but we reckon that keeping CERP‘s calamities in mind before making any quick decisions is definitely a good call.
