Investors Rush Towards DirectView Holdings, Inc (OTCMKTS:DIRV)
During yesterday’s trading the stock of DirectView Holdings, Inc (OTCMKTS:DIRV) enjoyed unprecedented interest from the market. Throughout the session more than 35 million of the company’s shares got traded, a new record for the ticker. But the traded volume was not the only thing that saw an impressive increase – the buying pressure pushed the stock to a close at $0.0083 for a gain of over 27%.
Just two days ago DIRV announced the successful completion of the initial tests of their body-worn camera product integrated with the xMax private mobile broadband technology developed by xG Technology, Inc. (NASDAQ:XGTI). That is right, despite being a pennystock company trading on the OTC market DIRV were able to launch a joint project with a NASDAQ-listed company. Is this enough to convince you to but their stock though?
So far DIRV’s financial results have been truly atrocious. The company finished the first quarter of 2015 with:
• $38 thousand cash
• $116 thousand total current assets
• $4.4 million total current liabilities
• $192 thousand sales
• $127 thousand net loss
The accumulated deficit is approaching $19 million while the working capital deficit is over $4.3 million.
DIRV have been funding their operations primarily through the issuance of convertible debt with more than $560 thousand in outstanding convertible promissory notes as of March 31. Since then even more notes have been issued – a $26 thousand note on April 8, a $115 thousand note on May 5, and a $157 thousand note on June 15. The last note is part of a larger $450 thousand commitment.
With so many notes that can be turned into common shares at a significant discount to the market price it shouldn’t be that surprising that the outstanding shares of the company are being constantly diluted. Back in March DIRV implemented a 1-for-30 reverse split and as of March 31 they had 130 million shares. Less than two months later, as of May 20, that number had already surpassed 232 million. 67 million of the newly issued shares came as a conversion of just $69,146 of debt at prices ranging from $0.0009 to $0.0012.
Even the deal with XGTI loses some of its glamour when you take into consideration the fact that the company is having troubles maintaining its NASDAQ listing. XGTI’s shares have fallen below the minimum bid requirement of $1 and most of the grace period allowed by the NASDAQ has already passed.
The consolidated DirectView/iMax solution is going to be put through field testing in the coming months with an official launch expected to take place later this year. The positive PRs about the progress of the product tests could keep the hype going but the impact that the millions of discounted shares could have on the share price should not be underestimated in the slightest. Do extensive due diligence and adjust your trades accordingly.
