Globalstar, Inc. (PINK:GSAT) Takes a Dip Ahead of Launch

GSAT_chart.pngOn Friday Globalstar, Inc. (PINK:GSAT) closed 22% down, reaching $0.43 per share at the bell. The stock maintained a steady price throughout the day but took a nose dive immediately before the close.

The company, which provides satellite telephone and data tracking solutions through low-orbit satellites, was recently delisted from the NASDAQ. Failing to maintain a closing price above $1, GSAT was moved to the OTC markets, preserving its ticker symbol. The company’s stock bottomed at $0.26 per share in the wake of the downlisting announcement in late December. In the second half of January GSAT was set ablaze and had a solid run up, peaking as high as $0.60 on the anticipated launch of its new and final batch of satellites.

The company’s latest financial report is for Q3 of 2012 and contains the following numbers:

  • $1.2 million in cash
  • $762 million in current liabilities
  • $20 million in Q3 revenue
  • $41 million in Q3 net loss

While the net loss figure doesn’t mean GSAT is going under, it’s still unpleasant as the company has not turned profit in the first three quarters of 2012. The previous three fiscal years also ended in net losses ranging from $54 to $97 million.

Globalstar’s latest 8-K filing details a stock purchase agreement, described by the company as an “issuer-managed equity financing facility”. Under the agreement GSAT can issue up to $30 million worth of shares to Terrapin Opportunity, L.P. when it so desires. The provisions for issuing as GSAT deems it needed are something of a consolation for investors fearing rampant dilution.

9BRND_fail.pngThe company will probably have to think of a way to start turning sufficient monetary revenue to record profit soon as endless equity financing can only get you so far before you drown in dilution. Investors could watch out for GSAT action tomorrow as the company’s website counter has only 1 day and 3 hours left on it till the satellite launch.

GSAT was targeted by a one-day paid promo back in November 2012 and the result was the usual price-drop hiccup after the pump. Ambiguously named promoters The Bull Report who ran the pump previously had much worse luck with their targeted companies. One example is the $60 thousand pump on Premier Brands, Inc. (PINK:BRNDE). The stock crashed horribly after being hammered by multiple promoters for even higher promo sums and is currently sitting in a timeout, over 90% down from its pump highs.

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