Great East Energy Inc (OTCBB:GASE) Targeted by a $1.1 Million Pump
Numerous penny stocks close acquisitions and go through name changes every day. The problem in most cases is that development stage companies often fail with their ambitious business plans and need to take on a new direction. Back in September 2013, Great East Energy Inc (OTCBB:GASE) (who were then known as Epsilon Corp) realized that they won’t be able to develop and launch their social media platform which is why they changed the name, acquired a new ticker symbol, performed a stock split, and started looking for acquisition candidates.
They managed to complete a merger with a private entity called Synerdal Services Ltd and through their new subsidiary, they entered the natural gas exploration industry. Apparently, Synerdal own some producing properties in Ukraine and they seem to have been in the business for quite some time.
A couple of weeks ago, GASE published the combined financial statements for Great East Energy and the new daughter company and it shows that as of September 30, 2013, the two enterprises had:
- cash: $564 thousand
- current assets: $636 thousand
- current liabilities: $908 thousand
- quarterly revenues: $87 thousand
- quarterly net loss: $57 thousand
The balance sheet is by no means perfect, but it does show that GASE is now an operating entity. It’s clear that the decision to acquire Synerdal was a good one and if everything goes according to plan, shareholders’ value might be given a boost.
As is often the case, however, there’s a catch.
If you take a look at our database, you’ll see that on February 3 we received an email from Stock Junction. It contains a short report written by a person who goes by the name of Frank Baldoria and he apparently decided to publish the full version of his expose on a landing page. As you might imagine, there’s a disclaimer and it says that an entity called Luxair Contracts Inc. has paid $1.1 million for the promotion of GASE‘s stock.
In addition to this, when you open the company profile on Yahoo! Finance, you’ll see that a new entry appears there every other day. A quick look through the articles reveals that most of them were published by an entity called Stock Market Media Group who admit in their disclaimer that they have received $3 thousand for their optimism.
The fact that someone is spending so much money on pumping GASE‘s stock means that there is someone who can benefit from the whole campaign. Brave investors who are aware of the promotion and time their trades carefully might take advantage of it. The stock isn’t the most explosive runner on the OTC Markets at the moment, but we can see that volumes are slowly picking up and a few optimistic press releases (such as the one from today that informs us about a $1.49 million private placement) could really give the ticker a boost.
Bear in mind, however, that the biggest winners of them all will be the one who hold a large number of discounted shares. We had a quick look at GASE‘s older filings and we saw that back in February 2012, when they were taking Epsilon public, they tried to sell 1 million shares at $0.12 a piece. A few months later, on June 29, 2012 some unnamed investors decided to purchase 360 thousand of them and they spent $43,200 in the process. When you take into account the effects of the 56-for-1 split from September 2013, you’ll see that the aforementioned investors could now be holding more than 20 million shares of GASE common stock.
Are they still hanging on to their stakes? We’ve no idea, but if they are, they might decide to get rid of the shares on the open market. And we all know what’s going to happen if they do.