Latitude 360 Inc (OTCMKTS:LATX) Bounces Despite All Odds
Latitude 360 Inc (OTCMKTS:LATX) went public after it executed a reverse merger agreement with an OTC company called Kingdom Koncrete, Inc. The deal was closed at the end of May 2014 and the new name and ticker symbol were announced a few days later. The volumes were negligible, but there were some people who believed in the new company’s success. These people are not particularly happy at the moment.
After a brief peak to $3 per share, LATX settled at around $1 in September 2014 and it spent the following months moving mostly sideways. In May of this year, however, it lost its footing and it fell quite hard. The last few weeks have been particularly painful. After smashing its way through numerous 52-week lows, the ticker finally found a bottom at just $0.11 on Thursday.
There are many reasons for the horrible performance. The Q2 report is among them:
- NO cash
- current assets: $391 thousand
- current liabilities: $88.5 million
- quarterly revenues: $4.3 million
- quarterly net loss: $4.3 million
No, it’s not a typo. LATX really had a working capital deficit of over $88 million at the end of June. The company also had some notes which “contained a variable conversion feature”. The people in charge don’t appear to be too keen on sharing details about the said conversion feature, but they did say in the 10-Q that there is no floor which, we reckon, speaks pretty well for itself.
The company’s horrifying financials mean that the management team are struggling to keep their promises. They were pretty adamant, for example, that the repeatedly delayed opening of the bowling alley in Guiderland, New York will happen eventually, but they recently admitted that they have been a bit too optimistic. As a result, some contractors are now saying that they have some money to receive from LATX. The American Society of Composers, Authors and Publishers also reckon that they are owed some cash and they seem prepared to take the matter to court.
In light of the nightmare of a 10-Q, the potentially toxic debt, and the tonnes of bad publicity, LATX‘s performance from the last few months is hardly a shock. On Friday, however, the ticker did surprise everybody with a bounce. After trading a record-breaking 514 thousand shares, investors helped LATX to a close of almost $0.20 per share which represents a 21% gain on Thursday’s value.
The excitement was caused by a press release which said that LATX has entered into a management agreement with Frank Entertainment. If everything goes according to plan, the company could end up acquiring a total of three bowling, dining and entertainment locations “in the near future”.
This, if it happens, will effectively double the number of venues LATX operates and it will hopefully give the revenues a massive boost. But will it be enough to offset the effects of the terrifyingly horrible balance sheet and all the other problems that come with it?
That, as always, is up to you to decide.
