OriginOil Inc (OTCMKTS:OOIL) Climbing Again
We last wrote about OriginOil Inc (OTCMKTS:OOIL) on May 15. Back then, the ticker was climbing the charts, but not without the help of a paid promotion and a few optimistic press releases.
The company had just announced the launch of a new line of products and the pumpers were more than happy to spread the word around. At first, investors seemed excited about the news, but the run proved to be extremely short-lived and less than a week later, OOIL was pretty much back where it had started.
Things look pretty similar right now. Over the last couple of days we received a few promotional emails from Top Stock Tips and Orbit Stocks (as well as their affiliated newsletters) and yesterday, OOIL issued a press release. It said that a company called E3 Services and Solutions LLC has acquired a license to develop further and commercialize OOIL‘s Electro Water Separation technology.
Once again, investors seem pretty happy about the new developments. Yesterday, they traded more than 2.1 million shares while the ticker added 6.7% to its value. Currently, it stands at $0.205 per share and the question on everyone’s mind is: “Can it go further up?“.
A month ago, the 2013 10-K told us that there are a few problems. Naturally enough, we decided to see if they have been dealt with.
In terms of financials, the issues persist. Here’s what OOIL recorded at the end of the first quarter of 2014:
- cash: $994 thousand
- current assets: $1 million
- current liabilities: $5.2 million
- quarterly revenues: $159 thousand
- quarterly net loss: $4.2 million
They have managed to improve their cash position a bit, but at the same time, the current portion of the debt has more than doubled.
All in all, OOIL‘s financial situation still leaves a lot to be desired, but it should be noted that with new products in the pipeline and with the technology moving closer to commercialization, things could improve in the future.
There is, however, one thing that could put a rather big spoke in OOIL‘s wheel – dilution. As we mentioned in our previous article, a lot of shares saw the light of day as a conversion of notes during 2013. Things have not improved on that front.
In fact, during Q1, OOIL issued a total of 9,553,162 shares to satisfy $786,902 worth of debt. This brings the average conversion price down to just $0.082 per share. For the record, OOIL has never been traded below its current 52-week low of $0.12.
The Subsequent Events section (Page 13) of the latest 10-Q informs us that between April 16 and May 12, OOIL cleared a little over $195 thousand worth of notes with the issuance of nearly 2.5 million shares which pushes the conversion rate even further down.
With that in mind, let’s get back to the initial question: “Can OOIL go further up?“.
We’re about to find out. One thing is for sure – if the dilution continues (there’s still a lot of convertible notes outstanding), the stock could be in for a wild ride.
