Western Graphite, Inc. (OTCBB:WSGP) Crashed, as Predicted

As I pointed out in my previous article, Western Graphite, Inc. (OTCBB:WSGP) is a pump job and it was due for a reality check in the form of a quarterly financial report. The company filed it, and crashed.

The price was slowly creeping up in the start of the session, and then the filing came. WSGP dropped about 65% in a matter of minutes. Eventually it recovered to close at $1.51 per share for a 20.11% loss on a new volume high of nearly 2.6 million shares.

Here are some of the basic numbers found in the quarterly:

• $5,459 total current assets
• $1,544,944 total current liabilities
• $0 revenues
• $12,110 net loss

The report confirms that WSGP acquired its properties for shares of stock. The company also owes $1.5 million in cash for the Amorf Graphite property. That’s money WSGP simply doesn’t have. With the shares issued for the properties, the number of outstanding shares (OS) has gone up to 71 million. This means the market cap of WSGP is still about $107 million.

While WSGP recovered after the initial drop, at $1.51 it is still over-priced. The fundamentals simply can’t support this price level. Unless the company manages to pull off some miracle, the price will readjust to reflect the real worth of WSGP. The blind faith of believers can’t deny reality forever.