eLayaway, Inc. (OTCMKTS:ELAY) Slips Back Down
After sitting idle for months on end, eLayaway, Inc. (OTCMKTS:ELAY) jumped up a couple of weeks ago. With the help of a few no-compensation emails and lots of buzz around internet forums and social media, it managed to break out of the triple-zero levels. At one point, it even seemed intent on surging past the $0.002 mark, but the performance from the last couple of sessions shows pretty definitively that it simply doesn’t have enough steam to do it.
Yesterday, ELAY lost 11% of its value while logging a dollar volume of around $574 thousand. There are still some people who believe that the stock is capable of making another run, but there’s no shortage of investors who reckon that the ticker is done for.
Truth be told, there isn’t much to suggest that ELAY deserves to be out of the triple-zero levels. Back in August 2013, they published the 10-Q covering last year’s second quarter and it showed that the number of issued and outstanding shares was hovering around the 4.4 billion mark. Nobody was really interested in the ticker and perhaps that’s why, ELAY decided to effectuate a reverse split. They did it, but once again, trading was slow and the stock slipped towards the bottom of the chart.
At the same time, the company’s business performance wasn’t that great either. The Q3 report, for example, presents the following figures:
- cash: $1,495
- current assets: $67 thousand
- current liabilities: $2.7 million
- quarterly revenue: $28 thousand
- quarterly net loss: $545 thousand
The most disturbing thing is, without a doubt, the colossal debt that the company has to deal with. This, in turn, brings us onto another problem – dilution.
A huge part of the liabilities consist of convertible notes that can be turned into common stock at discounts ranging from 30% to 50% and it would appear that the creditors are taking full advantage of the favorable terms. The subsequent events section of the 10-Q, for example, tells us that between October 1 and November 12, ELAY printed more than 80 million shares as a conversion of debt. This brought the O/S count to nearly 220 million, but there’s plenty of things to suggest that the dilution hasn’t stopped there.
There’s no official filing informing us about additional stock issuance, but the company profile at OTC Markets’ website informs us that there were well over 1 billion shares issued and outstanding back in February. Having in mind the colossal trading volumes that we’ve seen over the last couple of weeks (sometimes exceeding 1.2 billion shares in a single day), this number could be even bigger right now.
The severe dilution is preventing ELAY from making a more serious run towards the $0.01 per share mark. This could turn out to be quite a problem in a couple of weeks’ time when some new rules and regulations start to come into effect for OTCQB stocks. A potential relegation to the Pink tier will put yet another dent in the company’s credibility which is already shaken by Bruce Harmon’s involvement with ELAY.
As we mentioned last week, the former CFO is also taking care of the financials of one of the most horrific promotional disasters of 2013 – Green Innovations Ltd (OTCBB:GNIN). His name also appears in the filings of Tauriga Sciences Inc (OTCMKTS:TAUG) and Organa Technologies Group Inc (OTCMKTS:OGNT).
Considering this, as well as the rest of the facts before putting any money on the line might not be a bad call.
