Alkame Holdings, Inc. (OTCMKTS:ALKM) Sinks Like A Stone
2014 has been a tough year for the long-term supporters of Alkame Holdings, Inc. (OTCMKTS:ALKM). The stock of the company became the target of not one but two multy-million pumps with devastating consequences for its share price. From around $1 per share commanded in May the stock found itself at below 5 cents in November. Although it tried to reclaim some of its losses the positive momentum behind the stock quickly dissipated and it has returned to sliding.
On Friday the selling of shares intensified even further with more than 6.9 million shares getting traded. For comparison on Thursday less than 300 thousand shares actually changed hands. As a result of the sell-off ALKM crashed hard and after wiping nearly 25% of its value closed at exactly 5 cents per share.
Even with the added risks of the paid pumps some investors still believed in the potential of the company. In our articles we have also stated that ALKM have the attraction of a stable venture that is generating revenues through its products. The latest quarterly report though undermined even this positive aspect of the company. The report showed that Alkame finished the third quarter of the year with:
• $161 thousand cash
• $711 thousand total current assets
• $2.2 million total current liabilities
• $6665 revenues
• $1.1 million net loss
The numbers represent a huge step backwards for the company. Compared to the previous quarter the amount of revenues dropped from $69 thousand to less than $7 thousand. Even when compared to $17 thousand in revenues posted for the same period last year the decrease is of nearly 60%. The picture gets even grimmer when you realize that in order to generate those $6665 in sales ALKM incurred costs of goods sold of $33 thousand.
The poor financial results have forced ALKM to look for more external sources of funds which meant the issuance of more convertible debt. Just for October the company sold two convertible debentures for a total of $88 thousand that could be turned into common shares at a 40% discount to the lowest price in the 25 trading days prior to the conversion.
If ALKM manage to successfully implement the business of the recently acquired High Country Shrimp Company and at the same time ramp up their alkaline water operations the stock could return to its previous price ranges. The risks around the company should not be underestimated though and the threat of further dilution could continue to influence the share price. Do your own due diligence and plan your trades accordingly.
