Blue Calypso Inc (OTCBB:BCYP) Bounces on News
We’ve been covering Blue Calypso Inc (OTCBB:BCYP) for a fair few months now and if you take a look at our previous coverages, or even if you glance at the chart on the right, you’ll see that BCYP is not exactly the most consistent performer on the OTC markets. The ticker often goes up fueled by some excitement after which it crumbles down only to bounce once again. It really is like a roller coaster ride, only it doesn’t seem to be too fun for the people who bought in on BCYP back in January and February when the price was sitting comfortably above the $0.20 per share mark. We’ll discuss the possibilities of the stock going back to these levels but before we do, let’s take a look at what happened yesterday.
True to form, BCYP was in the process of making another dip as just one week of trading had resulted in no less than 13% in losses. Yesterday, however, not one but two press releases hit the wire a couple of hours before the opening bell and it’s pretty clear that the investors’ reaction was positive. BCYP opened the day at $0.172, made a somewhat scary dip around noon, but ultimately came back with a vengeance, recovering one week’s worth of lost ground in no more than a few hours. The reasons?
They announced early in the morning that their Dash:TAGG mobile gaming platform will be launched during the ad:tech New York conference and the popularity of the event should definitely give the company some exposure, not to mention that the application should bring in a fresh source of revenues.
The second press release is just as exciting – the management team are organizing a conference call which will include a questions and answers session at the end of the month. The shareholders will be able to speak to the officers personally and the potential investors should also get an understanding of where the company stands without having to wait for the next quarterly report. Good news, no doubt, but will it have a more profound effect on the stock performance?
We’re not so sure about that. As we mentioned in previous articles, BCYP‘s financial statement doesn’t really inspire much confidence which could definitely scare quite a lot of investors away. They are trying to do something about it, but currently, the only way of improving the figures is through the issuance of quite a lot of stock. Between May and August, more than 20 million new shares saw the light of day and recently, they announced that they have conducted a private placement at a value, around 30% below the current price. Amendments to the convertible debentures now allow for more convenient conversion options and, generally speaking, there are quite a lot of things to suggest that more stock will be issued in the future.
Couple that with the $8.4 million net loss that BCYP registered during the second quarter of 2013 and you’ll see that the outlook isn’t so bright. The only thing that can change it is the outcome of the much talked about patent infringement lawsuits. As we mentioned in our previous coverages, BCYP managed to reach settlement agreements with MyLikes and Living Social, but there’s still no way of knowing what will happen to the complaints against Yelp Inc (NYSE:YELP), Groupon Inc (NASDAQ:GRPN) and Foursquare Labs, Inc.
The Markman hearing on these actions were scheduled for November 7, but because BCYP decided to include three additional patents in the proceedings, they have been postponed to February 5, 2014. That’s no less than three and a half months from now and that sort of time frame amounts to ages in Pennyland, especially when some severe dilution is expected. What’s more, we read in the 10-Q that Foursquare seem to be fighting back. They filed an action against BCYP alleging that the patents were not infringed and that they are invalid.
In any case, putting your money on a patent play is always risky. The legal actions often take quite a lot of time to get resolved and the outcome is never certain. In the meantime, the stock performance becomes more and more unpredictable as illustrated by Vertical Computer Systems Inc. (OTCMKTS:VCSY)’s chart on the right. Make sure you tread carefully and consider all the risks before jumping in.
