Alliance BioEnergy + Inc (OTCMKTS:ALLM) Marches Up on Expected News
Alliance BioEnergy + Inc (OTCMKTS:ALLM) has been on something of a roll over the last few days. Yesterday, it logged its sixth consecutive green session, added a healthy 22% to its value, and finished the day at $0.75 per share for the first time in exactly seven months.
This is not bad for a stock that was barely keeping its head above the $0.20 mark about four weeks ago, but it will amount to nothing if there’s no volume. That’s where things get somewhat strange. There is definitely some increased activity around ALLM. More than 288 thousand shares changed hands during yesterday’s session which is more than three times the 30-day average. That said, only 95 trades were executed which goes to show that the number of buyers isn’t that huge. But what are they buying exactly?
At the beginning, ALLM wanted to make an impact on the entertainment industry, but they soon realized that this will be very difficult. In September 2014, they ditched their entertainment subsidiaries and decided that their sole focus from now on will be on the renewable energy field. And, at least according to the press releases, they do seem to be making some progress.
A couple of weeks ago, the company announced that the construction of the CTS demonstration plant has been completed. The management team said that they are starting the optimization process immediately and informed their shareholders that they should be ready with it by the middle of May. It’s now the middle of May and, naturally enough, people are expecting some news to hit the wire soon. That could explain the recent increase in liquidity and price.
Unfortunately, whether ALLM deserves the attention it’s receiving is a different matter altogether. The press release from April 30 does sound optimistic enough, but about an hour after the end of yesterday’s session, ALLM filed their 10-Q for the first quarter of 2015 and it must be said that the figures in it are not particularly encouraging. Here’s a summary:
- cash: $180 thousand
- current assets: $552 thousand
- current liabilities: $2.5 million
- NO revenue
- quarterly net loss: $358 thousand
If you take a closer look at the report, you’ll see that over the years, there have been quite a few related party transactions and quite a lot of cash has been paid to entities controlled by the management team. Speaking of the management team, On February 2, the Board of Directors put a person called David Matthews at the helm of ALLM, but apparently, a shareholder holding the majority of the votes wasn’t particularly happy about this decision. A couple of months later, Mr. Matthews was terminated and two of the Directors left with him.
It’s up to you to decide what you should make of the relationships between the people in charge of the company, and while you’re at it, you might want to look at one more thing. During Q1, ALLM issued a total of $143 thousand worth of convertible notes which can be turned into common shares at a 39% discount.
Compared to other penny stocks like Veriteq Corp (OTCMKTS:VTEQ), the amount of toxic debt is not that huge, at least for the time being, but it could still have its effect on the performance. Bearing this in mind might not be a bad call.
