TheDirectory.com Inc (OTCMKTS:SEEK) on a Winning Spree
At the end of 2012, Scott Gallagher, TheDirectory.com Inc (OTCMKTS:SEEK)’s CEO, assured the shareholders that he’s doing everything he can to get the company fully reporting “in early 2013“. As you probably know, he failed to do it.
Now, though, a year and a half later, the dream of seeing SEEK on the OTCQB tier seems to be closer than ever. The ticker is still on the Pink level and this probably has something to do with the fact that OTC Markets recently put a minimum bid price of $0.01 per share for QB enterprises. Nevertheless, the company is now reporting with the SEC and the stock seems to be moving up.
In fact, SEEK hasn’t registered a red session in more than a week now and after another 22% jump yesterday, it’s sitting at $0.0033 per share. People seem rather excited about the recent developments and we should note that there are a few positive things.
The company announced the opening of a couple of new offices back in April and last week, they showed us their TV commercial which will be broadcast by a number of channels across the US. Of course, the 10-Q covering the quarter ended February 28 is also helping with the enthusiasm.
Here’s a summary of the unaudited financials:
- cash: $46 thousand
- current assets: $473 thousand
- current liabilities: $2.4 million
- quarterly revenues: $801 thousand
- quarterly net income: $212 thousand
There are, of course, some obvious problems like the dismal cash reserves and the huge working capital deficit, but there’s no getting away from the fact that there isn’t a whole lot of companies in Pennyland that can brag about a positive bottom line and more than $800 thousand in quarterly revenues. So why, you might be wondering, is SEEK so deep in the sub-penny levels?
If you take the time to open all the filings and compare them, you’d know. A quick check reveals that the number of issued and outstanding shares grew by more than 1 billion between September 2013 and April 2014. 573 million of them saw the light of day as a conversion of debt at prices ranging from $0.0004 to $0.0016 per share.
On the one hand, this is causing some severe dilution and the fact that a couple of months ago, SEEK decided to raise the number of authorized shares to 6 billion suggests that some more stock issuance might occur in the near future.
On the other, the discount features of the notes might tempt some of the former creditors to unleash the converted shares on the open market. If that happens, the ticker could be in for quite a crash. How bad can it be?
If you take a quick look at our articles, you’ll see that Eyes on The Go Inc (OTCMKTS:AXCG)’s shareholders are faced with pretty much the same problem. A couple of hours before yesterday’s opening bell, they presented us with the 10-Q covering the first quarter of 2014. It showed that between August 2013 and March 2014, they issued more than 1 billion shares as a conversion of debt at a rate of around $0.0002 per share. Investors apparently saw this and they hit the panic button. As a result, AXCG wiped out more than 50% of its market cap in just six and a half hours of trading.
