Directview Holdings Inc (OTCMKTS:DIRV) Blasts to a New 52-Week High
On the face of it, Directview Holdings Inc (OTCMKTS:DIRV) looks like one of the more solid enterprises on the OTC Markets. They’ve been around since 2006 and since then, they have stuck to their original business plan. They have provided video surveillance and security services to some major enterprises and institutions like The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NYSE:PEP), and NYPD and they have been generating revenues for a while. So, why aren’t investors interested in the stock? There could be a couple of reasons for this.
When you do a bit of research on DIRV‘s CEO, Roger Ralston, you’ll see that he was found guilty of participating in a data equipment scam back in 2001. Because of this, he was forced to spend five months in prison, which is not terribly good for the company credibility.
There are some other issues as well. We read in the latest 10-Q that DIRV‘s printing press has been working overtime during 2013. More than 15 million new shares saw the light of day between August 19 and November 19 and prior to that, a lot more stock was issued at $0.001 per share as a conversion of notes.
The dilution is substantial and, to top it all off, the company’s balance sheet isn’t exactly confidence-inspiring. Here’s a summary of the most important figures as of September 30, 2013:
- cash: $5,201
- current assets: $92 thousand
- current liabilities: $2.6 million
- quarterly revenues: $11 thousand
- quarterly net loss: $148 thousand
The working capital deficit and the net loss are the most immediately obvious problems, but when you compare the latest report with the one for the corresponding period of 2012, you’ll spot some other issues. The quarterly revenues have plunged by as much as 75% year-over-year while the sales for the nine months ended September 2013 have increased by no less than 83% when compared to the ones registered during the same period of 2012. This means that the revenue stream isn’t consistent which, in turn, makes predicting the future performance nigh on impossible.
All in all, there’s no shortage of things that could scare away potential investors and yet, over the last couple of days, we’ve seen some increased volumes. A week ago, DIRV surged in the right direction and registered more than 300% in daily gains. Some corrections followed, but yesterday, it made another 150% run and closed the session at $0.02 per share while logging a dollar volume of nearly $860 thousand. What could be the reason for this?
It’s the magical word that we’ve heard so many times over the last two months – “marijuana“. Many small cap enterprises have decided to change direction and enter the legalized cannabis business since the beginning of 2014 and this action has resulted in huge surges for the stocks. It’s clear that much the same thing is happening to DIRV. There is, however, one crucial bit of difference.
Unlike many of the other penny stock ventures (like Cannabusiness Group (OTCMKTS:CBGI)) that have ditched their previous business plan in order to enter the pot industry, DIRV will remain a security services provider. They want to partner with enterprises that do business in the marijuana sector and yesterday, they even announced an agreement with an entity called Legacy Construction Company of Colorado, LLC.
The new contract is definitely a step in the right direction, but we can’t help but think that the market’s reaction was a bit too exuberant. The fact that Legacy has plenty of connections with marijuana retailers and dispensaries has certainly helped the ticker reach a height of $0.02 per share, but is this alone enough to justify the price and the $4 million market cap that comes with it?
It’s up to you to decide. Keep in mind, however, that DIRV is also the target of a paid promotion at the moment. It’s being carried out by Financial News Media and, according to their disclaimer, they have received $3,100 for their efforts.
