OriginOil Inc (OTCMKTS:OOIL) Pays for a Pump
OriginOil Inc (OTCMKTS:OOIL)’s stock has been on a wild ride over the last few months. There have been lots of ups and downs, volumes spikes and days when nobody seemed that interested. Unfortunately, when you take a look at the longer term performance, you’ll see that it’s not that brilliant. Back in October 2013, for example, the ticker was hovering around $0.35 per share, whereas now, it appears to be struggling with the $0.20 barrier. What’s the reason for this?
If you take a look through our database, you’ll see that OOIL has been targeted by the paid pumpers a fair few times over the last few years. The latest promotional campaign started in April and the entity responsible for it is called Sherwood Ventures (who own more than a few promotional newsletters like SuperStockTips, InvestorSoup, etc.). What’s interesting about the campaign is the fact that the paying party is the company itself. As you can see from the emails’ disclaimers, OOIL paid Sherwood $35 thousand for the raised awareness.
We’re sure that when the management team decided to pump their own stock, they probably thought that they’re going to push it on a more prolonged run, but, as you can see, this hasn’t happened. The threat of paid promotions certainly adds a layer of risk to a potential investment and, when you take a look at the financial statement, you’ll spot a few other problems.
Here’s what OOIL had at the end of last year:
- cash: $821 thousand
- current assets: $877 thousand
- current liabilities: $2.4 million
- yearly revenues: $140 thousand
- yearly net loss: $8.7 million
There are some immediately obvious issues like the huge working capital deficit and the horrific net loss, but, perhaps the most disappointing thing in the 10-K is the 76% drop in revenues year-over-year.
As you can see, there are a fair few issues around the company, but we should note that there are some positive things as well – namely, the press releases. Yesterday, for example, OOIL said that they want to launch a line of products that can treat frack water. At the same time, an interview with Riggs Eckelberry, the company CEO, appeared on OOIL‘s website in which he hinted that an acquisition might be in the works.
Investors reacted positively and they traded a total of 2 million shares while the ticker gained around 14%. If the positive events announced through press releases turn into some cold, hard figures, OOIL might be in for a more consistent run. But while investors are waiting for the future financial statements, they might want to consider one more thing.
Between November 2013 and April 2014, OOIL printed more than 25 million shares of common stock. A rather big portion of them were issued as a conversion of debt and, as is often the case with small cap enterprises, they were valued way below the market price. The 10-K tells us that there’s still plenty of convertible notes waiting to be turned into common stock which means that the threat of more dilution and more discounted shares hitting the open market is very real. Considering this, as well as the other risks before putting any money on the line is absolutely essential.
Rainbow International Corp (OTCMKTS:RNBI) is another penny stock that had a positive session yesterday. It managed to shift nearly $1.3 million worth of shares while jumping up by as much as 36%. Unfortunately, the surge in interest seems to be caused by nothing more than a $250 thousand pump carried out by PennyStocks.com.
