TSIF (99.96)

TSIF's "Play of the Day" GSPH.OB, What's up with that!?

March 16, 2010 – Comments (2)

Becoming "well known"  (there are good and bad "well known" catagories) for my lengthy pitches, occasionally I turn one into a Blog for further comment by other Fools.  This is neither a recommendation for an upthumb or a downthumb call.  We are not responsible for CAPs scores gain or losses.

"Play of the Day's" (there may be more than one, there may be none), are HIGHLY Volitile at the time the call is made.  Many are VERY low volume equities.   They may be big board stocks or tine OB stocks.   We expect changes of 20% or more over a short time window.   Due to the volume and the nature of these stocks we do not recommend making either a green or red thumb.  Limit orders are HIGHLY recommended.  Note, however, that they may not kick in until some volume moves, (minutes, hours, days, weeks, months).

Play of the Days are only for those seeking more "thrill" and are impatient with slow stock market days where the S&P swings a mere 2% or less.  Play of the Days may triple, or quadruple for long periods of time, (see PALG.OB), for no apparent reason generating HUNDREDS of negative points.  Plays that go down by go down by half or 100%, generating 50-100 points. Many are controlled by insiders who hold large positions.

GOAL of this report:  Don't be a follower without spending some time doing the work.  Good companies are formed from reverse mergers and new foundings.  Bad companies are formed similarly.

All that Glitter is not Gold

Large Gold Nuggets and Brillant Diamonds were all hidden by dirt and rock.

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Current target:    GSPH.OB  Geospatial Holdings, Inc

Incorporated:  Not listed, does business in Pennsylvania. One annual report indicates stock registration filed in Nevada.

Equity Price when call was made:  $4.95

Call made by TSIF:    Down

Several High ranked players have called this UP.  There is no information listed by the players to utilize for research why.

Call made by BravoBevo when applicable:  Up

   (BravoBevo is a high ranked Fool known for both long and short term calls.  He is highly successful at getting in and out of low volume equities.   He is, however, a swing trader.  Following him on CAPS is difficult due to the 7-day rule).

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Pitch: 

Geospacial Holdings is up 23% today, (3/16/2010). I have no idea how high it can trend on it's low volume and recent interest, but here is some background:

NONRELATED, GeoEye Inc (GEOY) gapped up last week due to great earnings and announce of building a new geospacial satellite with Lockhead Martin. Geospacial Holdings (GSPH.OB) has NOTHING whatsoever do do with GeoEye, it's technology or it's product offering. I only mention the two together because Geospacial Holdings also "showed" up on the scene gapping upward at the same time. Geospacial Holdings is another low volume OB stock with an "unusual" market cap compared to product offering and revenue. It sports a market cap of $153 Million. It appears to offer a service in a much needed and growing area, mapping and managing pipeline infrastructure. It has an exclusive license to a product made by a Belgium company that it is purchasing for $3 Million. Full payment is due the end of December, 2010.

In their December Annual Report, Geospacial Holdings noted that:
(December 4, 2009 10K/A)

1. "At December 31, 2008, we had current assets of $655,513, and current liabilities of $2,992,128. We are a party to the Reduct License Agreement to license the Smart Probe technology from Reduct"

2. "Our Company has incurred net losses since inception. Our operations and capital requirements have been funded by sales of our Common Stock and advances from our chief executive officer. At December 31, 2008 current liabilities exceeded current assets by $2,336,615. Those factors as well as our commitments under the Reduct License Agreement raise doubts about our ability to continue as a going concern."

8K, 29 December, 2009:
3. Worked through a great deal of the licensing issues with Reduct and Delta. Contract now:

"Pursuant to the Reduct License, the Company made a payment of $100,000 to Delta upon signing the Agreement and will pay an additional $3,000,000 no later than December 15, 2010. The Company has also granted Delta (a) a warrant to purchase 3,000,000 shares of common stock of the Company at a purchase price of $0.50, which expires December 31, 2012, and (b) a warrant to purchase 500,000 shares of common stock of the Company at a purchase price of $0.425, which expires December 31, 2013."

In conjuction Geospacial raised $1.5 Million through Preferred shares at $1 each.

8-K 5 March 2010.
4. Issued warrants to buy 4 Million shares at $1 per share to two advisory companies.


Based on the above, it appears to me that Geospacial is in the phase where they are issuing shares to pay for services. I do give them some respect for raising $1.5 Million at $1 per preferred share. Many comanies issue MILLIONS of shares at pennies per share for seed money and the share count balloons from there.

Geospacial is more than $1.5 Million in debt currently. They are starting to get revenue, but I don't see it at a pace to pay for the licensing agreement. I certainly don't see the company instantly gaining enough recognition and growing at a rate to earn the $153 million Market Cap it currently has.

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TSIF Reporting.    The Sky (is/isn't) falling today, but it might tomorrow.