Lithium Exploration Group Inc (OTCMKTS:LEXG) Dusts Itself Off and Moves On

If you take the time to do some research on Lithium Exploration Group Inc (OTCMKTS:LEXG), you’ll find many thing that will probably urge you not to invest in this particular stock. Take the company’s history, for example.

LEXG has been around for quite a while now and over the years, it has announced many projects, joint ventures and interesting business endeavors. The results of all these announcements, however, consist of several appallingly unsuccessful stock promotions and a financial statement that looks like this:

  • cash: $59 thousand
  • current assets: $115 thousand
  • current liabilities: $1.2 million
  • quarterly revenues: $16 thousand
  • quarterly net loss: $1.1 million

The figures above are found in LEXG‘s most recent financial statement, but they’re more than seven months old. The company was supposed to publish the report for the year ended June 30 before the end of September, but it failed to do this which means that its profile at the OTC Markets is now stamped with a Limited Information sign.

The delinquency and the history of spectacular failures are definitely off-putting for most risk-averse investors, but that’s not where LEXG‘s biggest problem comes from. The biggest problem is related to the tonnes of toxic debt and the resulting dilution.

As is often the case, the notes are convertible into shares at discounts ranging from 30% to 50% and there’s so many of them that the results on the share structure have been absolutely profound. The number of issued and outstanding shares grew from 685 million in November 2014 all the way to 1.5 billion at the end of February 2015 which is when the first reverse split for the year occurred. Immediately after it, the O/S count stood at around 78 million, but it wasn’t to remain there for long.

An absolutely diabolical wave of dilution overwhelmed LEXG over the next seven months and it pushed the number of issued and outstanding shares to over 1.9 billion at the end of September. The management team had no other choice but to effect the second reverse split of 2015. This time the ratio was bigger (1 for 200 vs 1 for 20) which pushed the O/S count down to less than 10 million. Curiously enough, along with the split, they also raised the authorized cap all the way to 10 billion.

All in all, the unlucky investors who were buying prior to the two splits basically saw their money go up in smoke, but apparently, not many people are bothered about this at the moment. The stock has been consistently climbing the charts over the last few sessions and on Friday, it also managed to rack up a dollar volume of around $236 thousand. The performance was quite remarkable as well. The final session of the week ended with an 85% price increase for LEXG and a value of $0.19 per share. It’s showing no signs of slowing down in early trading today. About ten minutes after the opening bell, it’s already at $0.23 per share which is a healthy 21% in the green.

The reason for all this is a press release which, the headline would suggest, was supposed to give us a “timing update” on the launch of their new oil unit. In reality, the PR just said that the unit is being tested at the moment and that it will be released “as soon as possible”.

In other words, it doesn’t say much. The facts above, we reckon, do.

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