Amazonas Florestal (OTCMKTS:AZFL) Doubles on News
Amazonas Florestal (OTCMKTS:AZFL) has got some news for us. And that’s not something you see every day. In fact, between October 1 and December 9, the company issued absolutely no press releases, and it’s pretty clear from the chart that the lack of updates is having a serious effect on the stock.
During the aforementioned period, the ticker was barely traded and it slid down from around $0.002 to its 52-week low of $0.0005 per share.
And that, by the way, is not really that shocking because the figures in the latest financial statement are far from impressive. Here’s what financials looked like at the end of Q3:
- cash: $50 thousand
- inventory: $34.7 million
- current liabilities: $546 thousand
- NO quarterly revenue
- quarterly net loss: $23 thousand
As you can see, while they have plenty of timber lying around, it would appear that there aren’t a whole lot of people willing to buy it. Investors, however, reckon that this is going to change after the latest press release. It was issued a couple of hours before the closing bell on Tuesday and it’s fair to say that it had an almost immediate effect on the market’s attitude towards AZFL.
During Wednesday’s session, the stock managed to gain 33% and it finished the day at $0.0008. Yesterday, it doubled its value and closed the day at $0.0016 on a dollar volume of around $288 thousand which is quite a lot for a sub-penny stock. So, what exactly did AZFL tell us with their latest announcement?
The whole thing is a bit vague, but apparently, they want to restructure their timber operations in Brazil and assume a better position for future revenue and growth. Details are scarce, but the management team promised that it will provide the shareholders with regular updates. The steep share price appreciation shows that investors are willing to trust the people running AZFL.
The thing is, this might not be such an easy task for the people who like their extensive due diligence. According to the filings, for example, AZFL‘s CEO is called Bruce Barren and if you do some digging around, you’ll see that he was once at the helm of M Line Holdings Inc (OTCMKTS:MLHC). Last year he said how happy he was with his company’s performance and promised that the revenues for the first quarter of the fiscal 2014 (the three months ended September 2013) will be 40% higher than the ones registered during the corresponding period of the previous year. He did that in August 2013, but right now, more than a year and three months later, we can’t be sure whether he was right or not because MLHC is delinquent in its filings.
The only thing that we do know, however, is that the number of authorized MLHC shares grew from 500 million in May 2013 to 10 billion right now which suggests that some serious dilution might have occurred.
Speaking of dilution, AZFL‘s O/S count has also been growing at an alarming rate. It was sitting at around 454 million on June 30, but by the end of September, it had grown to 570 million. An additional filing from November 7 told us that a month ago, it was sitting at 658 million, and according to some people around the message boards, it’s now hovering around 876 million.
The future financial statement should give us an idea of how bad the dilution is exactly. In the meantime, treading carefully and thinking through all the risks is absolutely essential.
