4Cable TV International Inc (OTCMKTS:CATV) Falls Through the Floor
4Cable TV International Inc (OTCMKTS:CATV) first exploded last week for absolutely no apparent reason. Investors saw the increased activity and thought that maybe a major announcement is coming soon. They thought that they can outwit everybody else by jumping in early and they were buying hand over fist which brought the ticker from the sub-penny levels all the way to more than $0.02 per share.
People didn’t care about the lack of any obvious catalyst that could be fueling the run, and they couldn’t care less about CATV‘s historical performance. In a matter of just over seven and a half months, the ticker managed to drop from a 52-week high of $0.23 all the way down to just a third of a penny.
Investors were so excited about the sudden and unexplained buying, that they also ignored the horrid-looking financial statement. Going through the whole 10-Q is probably your best bet, but just to give you an idea of how bad it really is, we’ll now provide you with a snapshot of the most important figures:
- cash: $42,490
- current assets: $339,092
- current liabilities: $894,728
- quarterly revenues: $112,290
- quarterly net loss: $178,527
The report shows that the revenues have dropped by 47% on a quarter over quarter and 53% on a year over year basis. The management team reckon that this is due to bad weather conditions.
Despite the dismal 10-Q and the appalling chart, investors were still jumping in. Some were even saying that Steve Richey, CATV‘s CEO, had assured them over the phone that some news was coming. This was enough for them to disregard the red flags and they were convinced that the gamble will really pay off this time. It didn’t.
CATV took four heavy blows over the last five sessions and after a 36% crash yesterday, it logged a 52-week low of $0.003 and it stopped at $0.0032 per share. In other words, the stock incinerated 85% of its value in a matter of just eight days.
Predictably, the investors who were jumping in last week are now bitterly disappointed and many of them put the blame on Mr. Richey. Some other people, however, are not that upset.
As we mentioned in our previous articles, there was quite a lot of convertible debt on CATV‘s books at the end of Q1. To be a bit more specific, between October 2014 and January 2015, the company borrowed a total of $431,000 under various convertible note agreements which allow the note holders to turn the debt into stock at discounts that could reach 45%. As a result, on May 5, when CATV‘s open market price was set at a hair under $0.07 per share, some unnamed creditors received 658,304 shares at a little over $0.02. Of course, that wasn’t the end of the conversion.
Thanks to a Schedule 13 filed on Wednesday from LG Capital Funding LLC (and entity that is often associated with toxic debt among OTC companies), we learn that the number of issued and outstanding shares was sitting at just over 61 million a couple of days ago. This means that in a matter of less than two months, the company issued more than 11 million shares. Chances are, most of them are discounted and the people who got them are probably eager to unleash them on the open market and walk away with the profits.
Make sure you bear this in mind when you see the next God-forsaken penny stock make an explosive run despite the lack of news.
