Infinity Augmented Reality Inc (OTCMKTS:ALSO) Rallies Mostly Under the Radar

Technological progress has been constant over the last couple of decades. Innovative and exciting ideas and ways of turning them into reality are coming out of the brains of inventors throughout the world virtually every day. There are a few pieces of technology that really stand out from the crowd, though, and the notion of augmented reality is among them. As the company name would suggest, Infinity Augmented Reality Inc (OTCMKTS:ALSO)’s management team are hoping to tap into this particular business.

Back in March, ALSO ditched the financial services business, changed the name, and started developing an augmented reality software platform that is supposed to be absolutely revolutionary in the way it uses voice as well as facial and mood recognition. Lots of penny stocks undergo similar restructuring and they often become the target of paid promotions shortly after the changes. ALSO was no exception. First, Lions of Wall Street did a one-day campaign worth $6 thousand back in July and then, at the beginning of this month, Stock Hunter and their affiliated newsletters got compensated $15 thousand for a total of thirteen promotional emails.

As is often the case, the coverage resulted in some erratic ticker behavior, but the trading volumes suggested that not a whole lot of people were paying attention. Now the pumpers are gone, however, and ALSO seems to be moving in the right direction. It’s being pushed both by the interesting business plan and the optimistic press releases that are coming out of the company HQ.

First, on November 11, they announced that they’re negotiating a collaboration with a leader in the gaming industry which should enable ALSO to create the first ever augmented reality gaming platform. A week later, the aforementioned industry leader was revealed – William Hill plc (LON:WMH) – and this, along with some other positive developments sent the ticker on a winning spree.

Earlier today, another announcement came through that will probably result in a strong start of the week. The press release states that the founder of a social network called Mobli and an ALSO Director, Moshe Hogeg, has purchased “a substantial amount” of common shares on the open market. Mr. Hogeg is quoted to be a veteran technology entrepreneur and he says that he is confident in the company’s future success.

That’s all well and good and it’s sure to impact the performance during today’s session, but looking at ALSO‘s latest 10-Q, we can see that there are still some problems that need addressing. Here’s the a glimpse into the company’s financial situation as of May 31:

• cash: $320 thousand
• current assets: $325 thousand
• current liabilities: $1.1 million
• no revenue since inception
• quarterly net loss: $5 million

It’s clear that ALSO will need to raise some cash if they are to commercialize the ground-breaking software platform everyone’s so excited about, but, perhaps more worryingly, all the announcements fail to shed light on the question of how it is progressing. No deadlines have been set for the launch and the management team don’t seem too eager to inform us whether the completion of the platform is near or not. This leaves traders wondering if they’ll need to wait for years before the enterprise starts generating money or if they’ll be able to get some of their investments back really soon.

In the meantime, keeping in mind the rather big amount of outstanding warrants and options might not be a bad call. The exercise prices present a tasty discount compared to the current levels which, on the one hand, means that some dilution might crush the shareholders’ investments, but on the other, it could raise the risk of future promotional activity.

Let’s hope that ALSO will manage to dodge future pumps since, as Life Stem Genetics Inc (OTCBB:LIFS) showed us on Friday, the effects of such campaigns are often quite devastating. Even without the pumpers, however, it still pays to do your own due diligence and think through all the risks carefully before making your final decision.