Glassesoff Inc (OTCBB:GLSO) Seems Confident Off the Line

Looking at the $2.40 per share price and the $127 million market cap, you might think that Glassesoff Inc (OTCBB:GLSO) is an established company with a commercialized product and some significant revenues. That’s not strictly the case.

Up until August, GLSO‘s name was Autovative Products Inc and the company was in the business of distributing automobile parts. Then, a merger was completed, the name was changed, a 7.5 for 1 stock split was effectuated, some new people took the helm, and a fresh business model was put in place. We should say that it’s a rather interesting business model as well.

According to company descriptions, GLSO own a patent-protected piece of technology which has helped them develop a revolutionary mobile phone application that is supposed eliminate the need for reading glasses. Once you download the app, all you need to do is perform a few game-like training sessions and, after a few months, GLSO say, you will be able to throw the spectacles in the bin. It’s certainly an interesting proposition and people are starting to pay attention. A couple of PR articles and a coverage on Wall Street Journal have also helped the ticker reached the levels it now occupies. But aren’t they a bit high?

Well, if you take just a quick look through the 10-Q covering the third quarter of 2013, you might argue that they are. Here’s a summary of the most important figures:

• cash: $2,437
• current assets: $2,581
• current liabilities: $623
• no revenue since inception
• quarterly net loss: $834

It’s clear that these sort of financials won’t get them far, but they do say that they have closed a private placement through which they have secured around $3.1 million. They also say that lack of cash shouldn’t be a problem for the time being which boosts the ticker’s appeal, despite the $2.40 price tag. Still, as is often the case in Pennyland, there are some things well worth considering.

For one, the aforementioned private placement involves units that consist of both common shares and warrants. The units were priced at $1.25 each, which might have seemed reasonable back then, but at the moment, it presents a hefty discount.

What’s more, while the app was unveiled a couple of days ago and is now available for iOS devices, it’s still in its free version which means that it won’t generate even a dime in revenues. At least for the time being. It’s still not out in Android guise and, on the whole, it’s quite early to estimate the software’s chances of success.

Then there’s the question of the excitement flying around GLSO. We’re already seeing some quite optimistic Seeking Alpha articles and they all seem to present the stock as “undervalued”. It’s up to you to decide whether this is the case or not, but you should probably keep in mind the $127 million market cap.

Yet another thing to worry about is the threat of a paid promotion. The change in the name, the new business plan and management, the stock split, and the increase in the number of authorized shares are often steps that are taken prior to a major pump campaign. Of course, in the case of GLSO, these might be nothing more than corporate restructuring actions, but even so, doing a lot of due diligence and weighing the risks carefully is absolutely essential before putting any money on the line.

The people who got a bit carried away with the excitement around Makism 3D Corp (OTCBB:MDDD) (a company that underwent similar changes before the $2.75 million pump), for example, lost nearly 30% of their investments yesterday. Hopefully, GLSO‘s shareholders will manage to avoid similar faith.