When CoreStream Energy Inc (PINK:ZLUS) announced two days ago it had acquired 18 producing oil wells, its stock went to the roof, gaining 72% in value and closing at $0.0024 with 124 million shares changing hands. As inspiring as the update seemed, investors somehow failed to pay attention to a parralel update, i.e the submission of the Q1 report for 2010.

The total area of the Kentucky-based oil property is said to allow for drilling in up to 700 wells. So, if ZLUS really completes the leases within the next three months, it will get the green light to commence operations. However, the latest financial report filed on Mar. 9 questions the company's ability to finance the project. Which is why yesterday's session was nowhere near as successful for ZLUS as the previous one. The figures speak for themselves: a 21% price slump and a double decrease in volume.

What is it that scared investors so much? As of Mar. 31, 2010, the financial state of the company looked as follows:

• $80 thousand in current assets vs. $8 million in current liabilities;

• net income of $118 thousand as compared to a net loss of $620 thousand for the previous quarter.

In spite of the significant improve in terms of net income, the gap in the company's working capital is too big to be eliminated within a year.

So far, ZLUS has issued about 65% of its total authorized stock of 1.5 billion. Therefore, there is still an alternative to raise additional capital buy issuing new stock. While such a move will definitely dilute current shareholders, it might provide the financial support necessary to develop the oil property. In case the latter turns out to be rich in oil deposits, all efforts and compromises will pay off, to the delight of ZLUS stockholders.