Green Automotive Co (OTCMKTS:GACR) Desperate to Recover
Unlike a rather big part of the enterprises listed on the OTC Markets, Green Automotive Co (OTCMKTS:GACR) has already gone through the development stage. The company has products, operations, and revenues. So why, you may be wondering, did the stock go from more than $0.30 per share back in December 2013 to less than $0.03 right now?
The paid pumps certainly played their role. The ticker saw quite a lot of promotional activity in January and April and some prominent outfits like David Cohen, Penny Stocks Forever, and Stock Mister pocketed a rather large amount of money. Unfortunately, the increased awareness did little more than accelerate the fall.
GACR‘s financial situation is not that bright either. There are indeed revenues and they are growing (there’s been a 471% leap year over year in that aspect), but the rest of the balance sheet is not that impressive. Here’s a summary of the figures as of March 31:
- cash: $224 thousand
- current assets: $1.3 million
- current liabilities: $13 million
- quarterly revenues: $1.2 million
- operating expenses for the period: $6.1 million
There is indeed a positive bottom line, but it’s the result of non-cash income related to a change in the fair value of derivative liabilities and the management team says that it’s not indicative of GACR‘s operations. At the same time, the company is burdened with an absolutely ridiculous amount of debt and the revenues, though growing, are nowhere near enough to cover the expenses.
To top it all off, GACR is involved in some legal proceedings which could worsen the situation further.
That said, there are some positive things as well. About a month ago, GACR completed the acquisition of a company called Blackhawk Manufacturing. According to the new subsidiary’s website, they’ve been on the market for nearly twenty years now and they have facilities in California and Mexico. If the new daughter company’s business is solid and if GACR manage to keep the expenses at bay, they might just be able to bring some value to the shareholders.
If you believe that they’re capable of doing it, you’ll see the current market price as a great buying opportunity and, as we mentioned, you might be right. Bear in mind, however, that there are people out there who can get large amounts of GACR shares at an even lower level.
There’s a lot of convertible notes that can be turned into common stock with discounts ranging from 35% to 50%. It seems that some of the note holders are already taking advantage of the favorable conditions and during the first quarter, GACR issued more than 19 million shares as a conversion of $555 thousand worth of debt.
The toxic financing means that even if the business continues to grow (and it seems to be doing just that), the dilution could potentially prevent the stock from displaying any sort of consistent growth. Bearing this in mind while making your investment decision is, we reckon, absolutely crucial.
