Yesterday, the share price of VelaTel Global Communications, Inc. (PINK:VELA) attempted to touch the bottom again, yet the company’s valuation still looks quite optimistic for its huge debts, high dilution rates and declining revenues. 
Daily low for yesterday’s trading session was at $0.049, which is above the lowest price for the past 52 weeks that was hit in the middle of December. That is no reason for optimistic expectations, however, as VELA closed the session with a 4.29% decrease in value at $0.0535 on around the average trading volume of 3.3 million shares.
Although VELA has been in a strong downtrend, its stock still holds a market value of over $34 million. At the same time, the company’s latest financial statement shows almost $21 million in current liabilities only, which is nearly twice the company’s total assets. VELA sales have also been going down over the past four quarters, reaching $115,000 for the three months ending September 30, 2011.
In addition to that negative trends come the high dilution risks that are likely to increase even more on that huge debts. In December last year, VELA issued 15 million new shares of common stock after the terms of a previous agreement with two other companies from November 2010 had been changed, causing shareholder dilution that probably came as an unexpected surprise for some traders of VELA.
Under that above mentioned agreement, three companies, among which VELA under its old name China Tel Group, Inc., intended with joint resources to upgrade some existing fiber optic cable in the People’s Republic of China. The partners on that joint venture intended to charge transport fees to telecommunications operators who would be willing to use the network.
This only one of VELA’s projects in cooperation with various other entities, but the company’s financial reports confirm only that neither of the company’s numerous ventures and partnerships has achieved something more than only minimal revenues and huge losses. Currently, VELA only keeps losing the trust of investors.
