Grilled Cheese Truck Inc (OTCMKTS:GRLD) Turns Up the Heat
At the end of January, Grilled Cheese Truck Inc (OTCMKTS:GRLD) made a rather embarrassing mistake when they proudly announced that the stock of their company has started trading on the OTCQX Marketplace. In fact, it was approved for listing on the lower OTCQB tier.
Despite the confusion, some investors were ready to fork out $6 per share for GRLD. Others, however, reckoned that it doesn’t really deserve this valuation. And they didn’t think that the PR mistake was the problem.
Nobody can say for sure whether the negative coverage had anything to do with it, but the fact is that GRLD lost quite a lot of ground over the following months. Right now, it’s traded at $1.24 which is about a quarter of what investors were paying for it seven months ago. Yet, yesterday’s dollar volume of about $260 thousand (an absolute record) means that some people reckon that the stock is still worth a punt. But is it?
Well, the volume spike wasn’t caused by anything immediately obvious which makes a potential investment (or even a quick trade) rather risky. There’s no promotional activity, SEC filings, or press releases that could be attracting investors to the stock which is probably why, instead of pushing it higher, the increased trading from yesterday actually dragged it about 3% down.
The market cap at the moment stands at a little over $28 million which is a far cry from the $100 million value the company had after the first active sessions in February, and that could make some people think that this actually represents a great entry point. If you are among those people, we suggest that you take a closer look at the financial report for the second quarter of this year. The most important figures in it look like this:
- cash: $86,647
- current assets: $384,592
- current liabilities: $3,766,251
- quarterly revenues: $960,352
- quarterly net loss: $749,498
There’s no doubt in anyone’s mind that GRLD is a working enterprise that has established operations. Even so, nearly $30 million for a company that has less than $1 million in quarterly sales might be stretching it a bit.
Of course, it’s not all bad news. GRLD said in the 10-Q that they are in the process of negotiating a couple of acquisitions and a press release from two weeks ago informed us that they have received a brand new truck. Theoretically speaking, this should give the revenues a boost, and it will hopefully improve the profit margins.
The possibility of a brighter future, however, doesn’t mean that you should relax and put your money on the line without doing the necessary due diligence and risk assessment. Especially when you have in mind that at the end of Q2, there was $570 thousand worth of debt convertible at $1 per share and a further $125 thousand convertible at $0.75.
More than 3.6 million shares have already been issued as a conversion of notes at $1 a piece, and although the more recent notes carry a conversion rate of $2, even they could present a threat if the stock manages to climb higher.
