Platina had a couple of events worth commenting on today. Sorry for the lateness of this posting, but I am traveling and thus have to get to these updates when I can.

Platina filed its 10Q quarterly financial statement with the SEC today as it announced well #7 in Kentucky has gone into production.

Here’s the biggest challenge for Platina. If you read the company’s press releases and independent appraisals of their reserves, you can argue the stock is absurdly undervalued.

If you read the company’s financial report from the June quarter, you can make the argument the company is a total disaster, and the capital structure is a mess.

The truth, as always, is somewhere in the middle.

Here’s my message to investors on PLTG. I have put this in print, and I’ll continue to reinforce the message- the June quarterly performance numbers are in a sense a moot point. On the plus side, PLTG is carrying its properties as a $6 million asset in “uproven reserves”. The rest of the balance sheet reveals a company with $11 million in assets, very little cash, and a variety of different sorts of debt.
To understand the company, you have to understand the $6 million in uproven assets started to turn into a real revenue stream in July- so far disclosed to be at least in the neighborhood of $1 million for the three month period beginning July 1st.

The real, hard number in revenues for Q3 won’t be seen until mid November- six weeks after the quarter ends. If the top line is not in the neighborhood of at least $1 million, then Houston, we have a problem.

There is some revealing information in the 10Q- PLTG has paid for a lot of stuff of all kinds by issuing stock- this might help explain some of the sloppiness in the chart. according to the 10Q, there are now 150 million shares I&O- up from the number in the filings from their end of March. The new stock issuances might not be free trading, but they are part of the capital structure, and therefore dilutive in nature.

However, it’s all about return on investment. PLTG has been investing in Kentucky for some time, and it’s evident in the growth of their assets vs the number of shares I&O. The big question?- Are the shareholders going to get an ROI- again- 7 producing wells since July 1st is strong, but the market needs to see the hard numbers.

Here’s a messy chart, but has potential:

The stock sold off pretty abruptly in August almost perfectly in concert with the drop in natural gas prices.

Since then, the stock has consolidated in the $.08 to $.10 range and is building a base.

When I first published, I set the SSL (suggested stop loss) at $.10- so if you decided to stay in you should be thinking a bit longer term.

If the stock sells down tomorrow on the 10Q, it would be an opportunity to jump in and accumulate - a low number, in the $.07 to $.08 range might even be good for a trade to the upside.

The news of the 7th well going into production could send the stock the other way. We’ll have to see. At any rate, the sooner they can monetize their investments, the sooner we will be able to quantify what we have here.

If we haven’t seen it already, I suspect we will see the summer low tomorrow, and it will end up being a great opportunity.

For those who want some education on reading these SEC filings- go watch my video entitled, of all things “Understanding the SEC Filings and Financial Statements”.

Comments and questions are welcome.