Special Diversified Opportunities Inc (OTCMKTS:SDOI) Feels Comfortable on the OTC Markets
Special Diversified Opportunities Inc (OTCMKTS:SDOI) is not your typical penny stocks. In fact, until recently, it shared very few of the characteristics we normally associate with small cap ventures.
A year ago, for example, the company was called Strategic Diagnostics Inc, its stock was trading on NASDAQ, it had just filed the financial report for the third quarter of 2012 and it showed that back then, SDOI had nearly $11 million in working capital and quarterly revenues of around $4 million. The latest balance sheet is even more solid but despite this, and despite the fact that the ticker managed to jump by 7.48% shifting more than $623 thousand worth of shares during yesterday’s session, an investment is still rather difficult. Here’s why.
Four months ago, the company was working in the biotechnology business and the substantial revenues were generated from the sale of a line of proprietary health-related products. SDOI‘s management team, however, decided to sell the assets related to the life science operations back in July. The buyer is a company called OriGene Technologies and the purchase price amounts to $16 million which led to the aforementioned solid balance sheet. Here’s a summary of the figures found in the report covering the third quarter of 2013:
- cash: $25 million
- current assets: $26 million
- current liabilities: $726 thousand
- no quarterly revenue
- net income: $2.6 million (coming from discontinued operations)
The sale of the bioscience business left SDOI with quite a lot of cash, but with nothing to work on and probably that’s why, a few weeks later, NASDAQ decided to delist the stock. Shortly after, the management team went through an overhaul, the name and the ticker symbol were changed and the people who took the helm started looking for acquisition candidates in order to restart the business.
Having seen the increased volume during yesterday’s session, we thought that there might be an announcement about a possible merger in the future or a letter of intent, but unfortunately, this is not the case. In fact, the latest press release to come out of SDOI‘s headquarters is the one informing the investing public about the ticker’s listing on the OTC Markets, which renders yesterday’s increased volumes a bit baffling.
On the bright side, the figures above clearly show that a potential acquisition shouldn’t be hampered by the lack of funds and it’s also worth noting that the annual stockholders meeting is scheduled for Friday. Hopefully, the management team will be able to give investors some more information about the future during it, but in the meantime, a potential trade remains rather speculative.
The people steering SDOI at the moment might also want to think about the location of the company headquarters. It appears to be offered as a virtual office and it also serves as the business address of another penny stock – Protective Capital (OTCMKTS:PCSO). As a cost-cutting measure, it might be a good solution in the short run, but it doesn’t inspire a lot of confidence.
SDOI isn’t the only company to gather a lot of interest during yesterday’s session. Life Stem Genetics Inc (OTCBB:LIFS) continued its unprecedented ascend up the charts. Unfortunately, the run is fueled by a $1.8 million pump which means that the threat of a violent correction is very real. Pan Global Corp (OTCMKTS:PGLO) lost nearly 40% yesterday and showed investors (for the second time) how painful the drop can be.
