Albuquerque, New Mexico – A hype-filled promotion for Lone Star Gold, Inc (OTCBB: LSTG) is in full swing as evidenced by some pretty outrageous emails being released into the digital universe.
The 10Q filed by the company on November 10, 2011 disclosed a total issued and outstanding share count of 116,517,096. Assuming no more shares have been issued since November 7th, this pegs the Lone Star Gold, Inc’s market cap today at $96,709,189 but scrolling down to the financial statement reveals a company with a grand total of $126,519 in assets against $61,477 in liabilities.
Further down the Lone Star Gold’s 10Q, the profit and loss statement shows the expected $0 in revenues and $805,628 in total expenses including quarterly management fees of $259,179. While much of the expenses are in stock being issued, the total economic picture seems a little light for a company that is trading at close to $100 million.
Looking at the employment agreement between the company and Dan Ferris, the President of Lone Star Gold discloses a modest cash salary of $120,000 a year but a stock compensation of another 1,000,000 shares of stock each year starting in 2012. The stock was apparently trading at $1 at the time the deal was sealed as it reports the value of the stock at $3,000,000… not a bad deal for Mr. Ferris. At the time he took over the company, Dan purchased 15 million shares for under $.0048 per share. Dan is based out of London. He has a background in public relations and promotion and has no apparent experience in any kind of essential geological disciplines such as mining or geology… another big red flag.
Subsequent to Mr Farris purchasing control of the corporation, the company acquired some Mexican property near other gold fields and raised cash, through transaction involving offshore companies, making this whole thing even more mysterious and then someone invested an enormous amount of money into stock promotions. Mermaid Finance got $200,000 to spread a highly promotional piece written by copywriter John Myers and his John Myers Letter proclaiming neighboring gold companies could “gobble” up Lone Star Gold at $125 a share or $146 Billion. Yeah.. that’ll happen.. AnotherWinningTrade.com got another $12,500 from the company to shoot the promo out to its subscribers.
While it’s difficult to determine the value of the rights acquired by Lone Star Gold a few months ago, for 425,000 shares of stock, a commitment to spend $150k per year on development of the property for 3 years and an obligation to pay an additional $125,000 in cash, I can say with a high degree of certainty that it isn’t $146 Billion 6 months later. What I can say with equal confidence is that, when you see this kind of outrageous promotion, the promotion is not to bring awareness to the market but rather to facilitate some major dumpage of stock at the expense of the suckers who believe this kind of crap.
Myers goes so far as to call this fantasy takeover “imminent and near-certain. ” Times must be tough as Myers apparently sold his well documented copywriting talent for only $7,500 to create this gem of a pump piece.
I’d do more research on the property and management structure but as far as I can see, there has been no meaningful exploration or development to this time. This brings the timing of the pump into greater question.
There’s really no reason to spend any more time on Lone Star Gold, Inc. Day traders should enjoy the volume and volatility of LSTG but as far as investing in it…. don’t bother. It’s got a cool name, a credit to Dan’s promotional background but beyond that, it’s a loser start to finish for everyone but the folks who are cashing in on the volatility created by this heavy promotion.
Disclaimer: We have financial interest or stock position in LSTG either long or short nor do we know anyone who does have a financial interest in the company or its stock. Neither have we been paid to write this article.
Killjoy.