RealBiz Media Group Inc (OTCMKTS:RBIZ) Refuses to Move

RealBiz Media Group Inc (OTCMKTS:RBIZ) published its latest 10-Q on Monday and we reckon that it’s only normal to start today’s article on the company with a summary of the most important figures.

The report covers the period ended July 31 and it looks like this:

• cash: $262,100
• current assets: $402,407
• current liabilities: $2,606,728
• quarterly revenues: $337,570
• quarterly net loss: $1,377,368

There’s been a significant jump in the revenues on a year over year basis, but even so, the statement is not exactly perfect. The net loss, for example, is quite huge. Yesterday, however, RBIZ announced that this might be about to change. They said that the month of July has been the first in the company’s history to end with a positive cash flow and they also assured the shareholders that a profit for the remainder of 2015 might not be out of reach.

That was, indeed, a big announcement and, naturally enough, many people expected a big day for the stock. Not surprisingly, the session ended with a volume of around 1.95 million shares which is almost six times the thirty-day average. Despite the increased interest and the gap up at the open, however, the stock refused to move in the right direction and it finished the session at $0.09 – exactly the same as Tuesday’s close. Early trading today might suggest that this is not a temporary set back. In fact, about twenty minutes into the session, RBIZ is a further 22% down at just $0.07. Time to find out what might be holding it back.

It’s not difficult to guess, really. RBIZ is a penny stock company and finding capital for penny stock companies is notoriously difficult. Of course, there are people who will be willing to lend you the money, but they’ll do it at some pretty horrific terms. That, for the more inexperienced among you, is what we often refer to as toxic debt.

When you scroll down past the financials in RBIZ‘s 10-Q, you’ll see the company was forced to borrow some money under note agreements with various entities. The debt is convertible into shares of common stock at 65% of the market price. Some of the note holders have already taken advantage of the favorable terms which means that more than a few shares have seen the light of day over the last few months, in some cases, at rates of just over $0.02 per share.

This, in turn, means that the said note holders could be eager to lock in the profits while the volume is still there. You, in the meantime, should perform your risk assessment and tread carefully.