Infrastructure Developments Corp (PINK:IDVC) Went Supersonic
We all know how volatile penny stocks could be. Even so, a jump of a whopping 151% is not something you see every day. That’s what Infrastructure Developments Corp (PINK:IDVC) did yesterday, though, and we decided to see what caused the jump.
There was a promotional effort, but it consisted of only one email sent out by Penny Stock G around noon and we doubt that it was enough to make that much of a difference to the intraday performance of the stock. Then we though that a new announcement might have caused the commotion, but it turned out that, although, there was a press-release a couple of days ago, it wasn’t really all that interesting. All in all, we’re not quite sure what is the reason for the movement during the last couple of days. The huge leap is a fact though and we decided to do a bit of research and see if IDVC deserve the $2.3 million market cap.
For a start, IDVC‘s core business consists of helping with the design, building and management of all kinds of infrastructure projects. This, you would agree is quite a lucrative business, and the companies that are working in it are usually very wealthy. What about IDVC? We opened their latest financial statement that covers the third quarter of 2012 hoping to see some respectable figures under the “Revenues” and “Net income” sections. It wasn’t to be:
- cash: $8 thousand
- current assets: $25 thousand
- current liabilities: $340 thousand
- quarterly revenue: $0
- quarterly net loss: $22 thousand
More worryingly, the report shows that during the same period in 2011 they had some contracts from which they managed to generate revenues amounting to $280 thousand in just three months. In 2012, though, there were no contracts, hence the zeros on the balance sheet.
That said, IDVC are now looking to expand their horizons. They say that they will soon complete an acquisition of a company that is dealing with the production of CNG (Compressed Natural Gas) and once they do it, they have high hopes of finally reaching profitability. They do say however, that before they acquire anything, they want to get rid of all the outstanding debt.
As seen from the figures above, they won’t be able to do that through cash payments, which means that they will most likely issue a massive amount of shares in the near future. This, by the way, is something that they are probably quite familiar with. Their latest 10-Q states that as at November 19, 2012, they had a total of 394 million shares outstanding. When their quarterly report for the same period of 2011 was released, they had 128 million. That’s around 266 million shares of common stock issued in no more than twelve months. We’re quite certain that IDVC‘s shareholders are not too happy with the way things are going and, with the upcoming acquisition, the dilution could be even worse.
This means that IDVC‘s President, Mr. Eric Montandon, as well as the rest of the management team, are faced with the extremely hard task of keeping the shareholders happy. Speaking of Mr. Montandon, we should point out that his burden will be especially heavy, since IDVC is not his sole business. He is also the CEO of another company called WWA Group, Inc. (OTC:WWAG) (through which he owns around 50% of IDVC‘s shares) and he has been involved with a few other publicly traded ventures which should be a good thing since he has a lot of experience. When we read through some investor message boards, however, we saw that his reputations is not exactly pristine.
We’re not saying that you should trust all the allegations you can find on the Internet, but it’s definitely worth keeping them in mind when making your decision on Mr. Montandon’s latest business venture.
