Big Tree Group Inc (OTCMKTS:BIGG) Pushed Above $0.02
The year 2014 started off well for Big Tree Group Inc (OTCMKTS:BIGG)’s stock. During the very first session on January 2, the ticker managed to log 15% in gains and a 52-week high of a whopping $0.45 per share. Unfortunately, things turned sour rather quickly.
The volumes disappeared and BIGG found itself on a steep downward slope. The losses were particularly painful during the summer and at the end of August, the stock dropped in the sub-penny levels.
BIGG spent the next few months deep below the $0.01 per share mark and once you take a quick look, you’ll see that there wasn’t really anything that could push it back up. The latest press release, for example, was issued in July and it wasn’t an announcement from the company, but rather a report from an entity called Market Advisors Research who, in exchange for $3 thousand, gave BIGG an ambitious price target of $0.20 per share.
The Q2 report is not what you’d call confidence-inspiring either. Here are the figures:
- cash: $29 thousand
- current assets: $12.1 million
- current liabilities: $12.9 million
- quarterly revenues: $4.8 million
- quarterly net loss: $29 thousand
On their own, the financials don’t look too horrific, especially for a penny stock. When you compare them to the results registered during the same period of 2013, however, you’ll see that there are some problems. The revenues, for example, have dropped by a scary 59% while the net income has been turned into a net loss.
As if that wasn’t bad enough, the company failed to publish their Q3 statement on time. In the notification of late filing, they said that they will be ready with it before the end of the extension period, but they failed to do that as well which means that currently, BIGG‘s OTC Markets profile is stamped with the Limited Information sign.
Yet, despite all this, we’ve been witnessing some movement in the stock. Funnily enough, the surge started just minutes after the company announced that it will be late with its 10-Q and perhaps more worryingly, there isn’t an immediately obvious cause for the increased interest. As we mentioned already, there are no new press releases and despite the increased activity around message boards and social networks, there doesn’t appear to be a paid promotion.
All in all, the reason for the climb remains a mystery, but the climb is a fact. After adding another 20% during yesterday’s session, BIGG managed to emerge above the $0.02 per share mark for the first time since August.
Investors who jumped in over the last few days can now keep their fingers crossed and hope that the Q3 report will be solid enough to support the stock at the current levels and maybe even push it further up. They mustn’t forget, however, that there is one thing that could depress the price regardless of how good the figures are.
If you read through the Convertible Loans Payable section of the latest 10-Q, you’ll see what we mean. Plenty of notes have been issued over the years and they can all be turned into common stock at discounts that, in some cases, reach 50%. The note holders have already taken advantage of the favorable terms, by the way.
During the first half of 2014, for example, BIGG printed a total of 3,423,365 shares in order to satisfy just $27,858 worth of debt. This brings the average conversion rate down to just over $0.06 per share which might sound pricey right now, but it was a bargain at the time of the conversion. The historical figures show us that during the first two quarters, BIGG was hovering rather comfortably above the $0.10 per share mark.
This makes the Q3 statement even more important. It should give us an idea of how much of the outstanding toxic debt has been converted. Until the report is out, treading carefully remains advisable.
