Titan Iron Ore Corp (OTCBB:TFER) Gets a Haircut
Titan Iron Ore Corp (OTCBB:TFER)’s performance during yesterday’s session wasn’t exactly perfect. The ticker dropped by more than 40% and finished the day at $0.0041 per share. All the while, it managed to shift around 347 million shares resulting in a dollar volume of $1.93 million.
That’s a scary drop, but, thanks to the jumps from the previous sessions, TFER is still more than 140% percent above the levels occupied at the start of the week. So, what’s going on?
It looks like the shareholders finally have something to cheer about. As you can see from the 10-Q covering the third quarter of 2013, TFER failed rather catastrophically with their previous business plan, but at the beginning of February, they announced that they have taken on a new direction.
Apparently, they have executed a definitive merger agreement with a company called iHookup Social Inc. iHookup is the entity behind the homonymous iOS dating app and if the press releases are to be believed, it’s doing rather well.
A new management team was put in place and over the last two months, they have established new sources of advertising revenues, upgraded the application, and pushed it higher up the ranks on the iTunes store.
All in all, things are looking good, but there are still some things that you might want to consider before putting your money on the line.
The merger was closed more than two months ago, but as of right now, we still don’t have the consolidated financial statements of the surviving entity. The recent announcements suggest that things are looking up, but on the other hand, TFER issued a couple of convertible notes after the merger which could suggest that they are in need of some capital. Hopefully, the 10-K which should come out soon (a notification of late filing was published on Monday) will give us a better understanding of where TFER stands at the moment.
The report should also answer some question around the share structure. The latest 10-Q shows that between August and November, TFER printed nearly 30 million common shares bringing the total O/S count to 85 million. The company profile on the OTC Markets tells us that as of January 7, there were a total of 262 million shares issued and outstanding, but according to an 8-K form published on February 18, this number has increased by around 92 million in a matter of forty-two days.
The same document also says that more than 1.1 billion shares are held in reserve to accommodate “certain convertible financing activities“. On top of that, two weeks ago, TFER announced their plans to increase the authorized capital to 10 billion shares which leaves a lot of room for stock issuance.
The only thing that could minimize the dilutive effects of all the share printing is the mobile app’s potential success. The press releases certainly sound positive, but you should bear in mind that this alone might not be enough.
TFER is currently steered by a person called Robert Rositano and this is not his first attempt to create a massively successful dating application. He is still listed as the CEO of a penny stock company called Mobile Matchmaking (OTCMKTS:MLOV) and, as the name would suggest, MLOV and TFER‘s business plans are pretty much identical. The former, however, isn’t doing too well. The stock hasn’t been actively traded for quite a while and the latest financial report is dated February 2011.
It’s clear that, for all the excitement around the iHookup app, there are still quite a lot of risks involved with a potential investment in TFER. Treading very carefully and doing a lot of due diligence might not be a bad call.
