Global Gaming Netwrk (OTCMKTS:GBGM) Bounces on News
Back in December 2013, Global Gaming Netwrk (OTCMKTS:GBGM) was hovering just below the $0.02 mark. On Wednesday, it closed the day at $0.0009. In other words, GBGM lost more than 95% of its value in just over six months. The reasons?
The pumpers certainly played their role. GBGM found itself on the receiving end of a couple of promotional campaigns in December 2013 and April 2014 and, as you can see, the increased awareness didn’t really do the stock any favors.
Fortunately, there are no promotions running at the moment and the next logical question is: “Is there anything else that could draw investors in?“.
GBGM‘s financial situation is not exactly encouraging. The latest report covers the first quarter of 2014 and it contains the following figures:
- cash: $46 thousand
- current assets: $220 thousand
- current liabilities: $6 thousand
- NO revenue
- quarterly net loss: $31 thousand
On the bright side, the current portion of the debt is kept at a minimum, but even so, the lack of revenues is certainly a problem.
As you can see, there isn’t a whole lot that could encourage people to put their money in GBGM. Yet, yesterday, that’s exactly what they did.
In just six and a half hours, investors traded more than 366 million shares and racked up a dollar volume of around $586 thousand. The ticker opened the day at $0.0011 (a 22% gap up), peaked at $0.0021, and then settled down. When the closing bell rang, GBGM was sitting at $0.0014 which represents 55% in daily gains.
The sudden spike was caused by a press release which hit the wire half an hour before the start of the session. GBGM plan to expand their operations by launching a project called Tune Trivia which has been developed with the help of the National Trivia Association. There are already some contracts in place and everything seems to be ready to go.
In addition to this, GBGM announced that they have acquired and canceled 50 million shares. As a result, the O/S count has been reduced by 6.3% which is definitely a good thing.
The new project certainly sounds exciting enough, but it should be noted that estimating its chances of success at the moment is rather difficult. Hopefully, there will be some figures under the revenues section of the future financial statements, but while we’re waiting for them, we should probably mention one more thing that could affect the stock performance.
If you take a closer look at the filings, you’ll see that there’s no shortage of convertible debt. As is often the case, the notes’ conversion features carry some hefty discounts. On November 25, 2013, for example, GBGM turned $24 thousand worth of debt into 3,750,000 shares bringing the conversion rate down to $0.0064 per share. On the very same day, the ticker closed the session at $0.0191.
There are also some preferred shares which are being converted into common ones. As a result, the O/S count grew by 35 million during the first quarter while the number of authorized shares was increased from 880,000,000 to 4,880,000,000.
The threat of dilution seems very real at the moment which is why doing your research and weighing the risks carefully is absolutely essential.
