Great American Energy Inc (OTC:SRBL) Get a Wake Up Call from PennyStockCrowd

Great American Energy Inc (OTC:SRBL) is a new company. Well, not quite. They have actually been around for a while and they have been involved in diverse business sectors. They realized that their previous ventures are not going to work out and so they decided that they are going to mine rare earth elements. We checked on them and see what the chances of success are.

In years gone by, they were also dealing with earth’s resources exploration, although back then, oil and natural gas were on the agenda. They also had a subsidiary that was in the entertainment business, which makes for a peculiar mixture. Nevertheless, neither of these ventures turned a profit so, back in 2011, they decided to enter the highly risky rare earth elements exploration sector.

Predictably, it hasn’t been plain sailing, and there is still a long way to go. While pumpers, PennyStockCrowd waste their breath telling us that China is going to take over the world because they are the biggest producer of rare earths in the world, their emails gives us very little information on SRBL and how they plan to start making money. Curiosity took over us, however, and we decided to see for ourselves.

While we should say that people at SRBL seem to be working on it, they are still far from ready. Back in December they announced that they have entered into an agreement for an option to purchase some mining interests in Canada. They are extremely confident in the potential of the reserves, however, investors will need to wait for a while and a lot of money will need to be spent before anything can actually happen. Their other property is located near Las Vegas and it also requires a lot more preparations before the diggers start digging. All in all, for now at least, we can see nothing but far-fetched confidence and a management team who are keeping their fingers crossed.

Of course, we wish them well but it’s only normal to check on their financials just to see how will they be getting on once all the licenses are acquired, all the sampling is done and everything is ready for mining to commence. We weren’t impressed with what we saw. The latest report covers the third quarter of 2012 and it looks rather dismal. Here’s a summary of the most important figures:

• current assets: $5,904 in cash
• current liabilities: $58 thousand
• no revenue
• net loss (Q3 of 2012): $274 thousand

In an attempt to get SBRL out of the ditch, the management team have arranged a number of stock purchase agreements with a company called Pacific Oil & Gas Investments. According to the filings Pacific Oil & Gas now own about 555 thousand shares of common stock and the same number of warrants. This could be a cause for concern among shareholders, especially if this remains the only financing method for SRBL, but the more disconcerting thing is that, try as we might, we could find absolutely no information about Pacific Oil & Gas Investments and the people standing behind it.

This puts a spoke in the wheels when it comes to the SRBL‘s credibility with experienced investors, and pumpers like PennyStockCrowd (PSC) might make things even worse. They have a history of touting mineral exploration companies in dire financial straits and, more often than not, things don’t end well. Viking Minerals Inc (OTC:VKML)’s investors can tell you exactly what we mean. PSC’s email about VKML came to us on January 23 and, as you can see from the chart on the right, this coincided with a catastrophic drop. VKML‘s shares have lost around 60% of their price since then.