Studio One Media, Inc (OTCMKTS:SOMD) Tries To Recover
On Monday Studio One Media, Inc. (OTCMKTS:SOMD) logged in a new 52-week low of just $0.35 per share. The stock managed to bounce off of that price though and actually closed the session with a gain of 10% at 44 cents. Yesterday the company added another 18% to its value climbing back up to $0.52.
Despite the encouraging start of the week SOMD‘s performance is still quite shaky especially when you take into consideration that nearly all of the gains from yesterday were registered just minutes before the closing bell. In addition the uptrend has not been backed up by anything substantial with the last PR issued by Studio One being close to a month old.
The annual report the company filed at the end of September couldn’t be the reason for the bounce up the chart either. According to it as of June 30 SOMD had:
• $2.18 million cash
• $5.5 million current assets
• $18.5 million current liabilities
• $302 thousand annual revenues
• $7 million loss from operations
• $11.1 million annual net loss
At first glance the balance sheet does have some significant improvements. The company now has sizable cash reserves while the annual revenues are 67% higher than the previous fiscal year. The problem is that the cash proceeds were achieved through the sale of common shares at prices comparable to the 52-week low of the stock. During the fiscal year SOMD sold 12.7 million shares for $4.5 million. And although the revenues are now bigger the net loss has grown at an even bigger pace – from $5.3 million to over $11 million.
In the report SOMD have stated that their current resources will not be sufficient to keep them going for the next twelve months not to mention that the cash needs of the company are anticipated to increase substantially.
Not everything is so bleak though. Studio One have a joint partnership agreement with ON Semiconductor Corp (NASDAQ:ON). Earlier this year SOMD and ON announced the completion of an AfterMaster encoded semiconductor chip based on the ON BelaSigna 300 DSP chip. Will the chip generate enough sales to offset the numerous red flags around the stock though? It is up to you to decide.
