Pleasant Kids Inc (OTCMKTS:PLKD) Falling Apart Again

It’s amazing how much abuse penny stock investors can take sometimes and how, even after all the losses, some of them are still ready to come back for more. To prove the point, we’ll use the rather sad story of Pleasant Kids Inc (OTCMKTS:PLKD).

It all started in September 2014 when a person by the name of Robert Rico took the helm and promised that he’ll turn the market upside down by introducing a brand new type of healthy alkalized water for kids. He then spent quite a lot of time posting photos of himself posing next to cases of Pleasant Kids water. He launched it on Amazon and he said that he has found distributors throughout the country who will sell it directly to the public.

All those efforts resulted in the following figures at the end of the second calendar quarter of 2015:

• NO cash
• current assets: $27,409 (mostly in inventory)
• current liabilities: $778,435
• revenue: $724
• quarterly net loss: $31,805

While the sales were, as you can see, tectonically slow, the same couldn’t be said about the share printing. The toxic debt that had been accumulated throughout the years hit the stock hard and it ran it to the ground. In a matter of a year and a half, the company was forced to issue a mind-boggling 7 billion (yes, that’s a “B”) shares in order to satisfy about $830 thousand worth of convertible notes.

The dilution was so severe that at one point, PLKD found itself scraping the bottom of the chart, which, by the way, seemed somewhat fitting in light of the pitiful results the company was registering. Then, however, Mr. Rico decided that there might be a salvation. First, in July, he effected a 1 for 500 reverse split which brought the O/S count down to a much more manageable 14 million.

Then, a month later, he got in contact with the people running a company called NEXT Group Holding and soon enough, a letter of intent was signed. A reverse merger deal was agreed upon which means that the alkaline water business will be ditched, Mr. Rico will resign, and PLKD will soon head in a completely different direction.

People suddenly started believing in the bright future again. In fact, between October 5 and October 20, the stock managed to run from less than $0.02 per share all the way to more than $0.13. Unfortunately, in typical PLKD fashion, some problems emerged and they are once again putting pressure on the ticker.

The press releases and even the company profile at the OTC Markets would have you believe that the merger has already been closed, but as we mentioned yesterday, this is not strictly the case. In fact, the closing date was pushed back to November 30 with the provision of a further 20-day extension.

Some people are starting to have their doubts which, in light of the company’s history, isn’t really that much of a surprise. PLKD was hit quite hard on Wednesday when it lost about 15%, but yesterday, the blow was even more substantial. A quarter of the market cap evaporated in a matter of just six and a half hours which means that PLKD is now sitting at just over $0.08 per share.

Of course, the fact that the merger has been delayed doesn’t necessarily mean that it will be called off. PLKD might be able to close it and it might succeed in becoming the multi-million dollar company everyone wants it to be. Without a confirmation, however, the stock is still quite risky. Especially when you have in mind that at the end of the second quarter, there was about $136 thousand worth of toxic debt outstanding and its conversion provisions were pretty much the same as the ones that steamrolled the ticker in 2014.