FutureWorld Corp (OTCMKTS:FWDG) Soars On Dividend Announcement
Yesterday an official statement was released by FINRA revealing the details about FutureWorld Corp. (OTCMKTS:FWDG)’s previously announced dividend in connection with the spinoff of their FutureLand subsidiary. According to the FINRA post 1 FutureLand Corp (FUTL) share will be granted for every 250 FWDG shares owned by shareholders as of the record date of June 12.
Investors reacted immediately to the opportunity to buy in before the record date and thus be eligible to receive the dividend and as a result FWDG skyrocketed up the chart. The stock surged by 150% and by the time of the closing bell it was sitting at $0.003. During the session an even higher intraday price of $0.0039 was reached. The traded volume of 124 million shares surpassed the 30-day average for the company by nearly 8 times.
Despite the overwhelmingly positive session investors should be careful and keep in mind that the FINRA announcement states that “FWDG will not be quoted ex-dividend”.
For now let’s focus on the dividend shares and see what investors are really getting into. Back in March FWDG entered into an agreement for the sale of their wholly owned subsidiary FutureLand Properties LLC to Aegea Inc, a publicly traded company. In May Aegea changed their name to FutureLand Corp and effected a 1-for-400 reverse split. As a result of the split the share price of the stock was bumped up significantly and it currently sits at $4.5.
Such valuations however may be viewed as incredibly over-inflated in regards to the financial state of the company prior to the deal with FWGD. Just two days ago the annual report for 2014 was submitted and it showed that at the end of last year Aegea had:
• ZERO assets
• $797 thousand current liabilities
• ZERO revenues
• 563 thousand net loss
As we said these numbers are before the reverse capitalization with the FWDG subsidiary but that doesn’t change how horrific they are. In addition there were several convertible notes outstanding under some of which the company has defaulted. The subsequent events section of the annual report reveals that thanks to the defaults the owner of a $58,000 convertible note now demanded $79,755 to be paid by June 3.
So, when the dividend gets distributed the share price of FUTL will be under the negative influence of two forces – all the investors who will be eager to cash in their free shares that are currently valued at $4.5 and all the shares that could potentially be issued under the convertible notes. It is up to you to decide whether FUTL will be able to sustain their current valuation or they will drop sharply down the chart.
