DD Support Board and Research Team

[nodummy]

Kentucky Energy Inc (QMIN)

Thanks for the post EastCoastCdn

So we a company with a history of frequent reverse splits:

Capital Change=shs decreased by 1 for 100 split. Effective date=1-30-04
Capital Change=shs decreased by 1 for 4 split. Pay date=8-17-07.
Capital Change=shs decreased by 1 for 10 split Pay date=12/14/2007.
Capital Change=shs decreased by 1 for 10 split Pay date=11/04/2008.
Capital Change=shs decreased by 1 for 100 split Pay date=08/04/2009.
Capital Change=shs decreased by 1 for 20 split Pay date=06/17/2010.
Capital Change=shs decreased by 1 for 25 split. Pay date=02/02/2011.


Time between splits
(8-17-07 ----> 12-14-07) = 4 months
(12-14-07 ----> 11-04-08) = 11 months
(11-04-08 -----> 8-04-09) = 9 monhts
(8-04-09 -----> 6-17-10) = 10 months
(6-17-10 -----> 2-02-11) = 8 months


So they average a reverse split every 8 months

Considering this most recent split was a 1:25 split I will estimate the next one will occur in August of 2011

Considering the last 4 of those reverse splits happened after the authorized share count was raised to 2,500,000,000 on 9-08-08 that is not a good thing

So they diluted 1.5 Billion shares from 9-08-08 to 11-04-08

They diluted over 2.1 Billion shares from 11-04-08 to 8-04-09

They diluted over 2.4 Billion shares from 8-04-09 to 6-17-10

They diluted over 2 Billion shares from 6-17-10 to 2-02-11

That's an average of over 266 million shares diluted per month since 9-08-08

There is little wonder that their TA is gagged.


Why so much dilution?

Well look at all these debt Notes:

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=7573005





That's $8.6 million in debt all together

It took them 8 full pages in the last 10Q filing just to list all their convertible debt Notes


Looking at their revenues and operating costs:

They made $2,243,192 for the first 9 months of 2010 from their coal, but it's not a very profitable business because it cost them $2,803,820 for the production of the coal so they lost $560,628 by mining the coal. They would have been better off not even bothering.

They also lost $1,701,843 in overall operating expenses through the first 9 months of 2010.

Bottom line - their operations are losing them money and so they aren't making any money through operations to help pay off their debts.

That leaves only 2 ways for them to pay with past debts

1) Selling shares

2) Adding more debt Notes to pay for the old ones

Looking through the filings it looks like they have been using both options.

They added 4 new Debt Notes in 2010 through the first 3 quarters and they sold an estimated 2.5 Billion shares during the first 9 months of 2010.


They have a $1,200,000 Note that is due on June 26, 2011

Another $1,000,000 Note that is due on June 11, 2011

A $200,000 Note that is due on June 13, 2011

A $50,000 Note that is due on October 23, 2011

A $50,000 Note that is due on March 22, 2011


This company is in big big trouble financially. Maybe Bankruptcy is an option?

Obviously this company is in a death spiral of debt they will not be getting out of any time soon - actually probably never. It amounts to a R/S play ever 8 months (average) and that's about the extent of this company's appeal for investors