Water Techn Ind Inc (PINK:WTII)’s Publicity Campaign is Never-Ending
The last time we wrote about Water Techn Ind Inc (PINK:WTII), it was about three months ago when there was a serious promotional effort running for them. The newsletters were quite a lot and the emails were flying around for a couple of days. Predictably the stock gained some ground but surprisingly, it remained relatively stable throughout February and March.
One thing that probably kept the price on a relatively level path is the annual report that came out at the beginning of February. In it we read that there has been a massive increase in revenue and when you compare the current statement to the one that we used in our previous article, you will see that they have indeed made a huge leap. The new report is still quite messy in terms of organization and formatting of the text but we once again bit the bullet, broke out the magnifying glasses and we summarized the most important financials below:
- cash: $5 thousand
- current assets: $94 thousand
- current liabilities: $196 thousand
- annual revenue: $425 thousand
- annual net loss: $800 thousand
If we have to be a bit pessimistic about the whole thing we would probably say that apart from the increase in revenue, little has changed – they still have a considerable working capital deficit as well as a worrying amount of net losses and very little in terms of cash. Still, we’re sure that the increased proceeds have put smiles on the shareholders’ faces.
One thing that we don’t like is the fact that there seem to be quite a lot of people who want to spread the word around which makes us dubious as to what their intentions really are. One thing is for sure – there’s no shortage of shares to be liquidated. A quick comparison between the financial statement for 2012 and the one for 2011 reveals that the number of outstanding common shares has nearly doubled over the period of just 12 months and if WTII don’t manage to reach the so-far elusive profitability, this sort of share issuance might present a threat to the investments made by long-term shareholders.
2 million of the shares issued in 2012 went to Wall Street Resources (WSR) who wrote a couple of research reports on WTII. The first one came out back in February and it contained a lot of promising projections about the future. The disclaimer reveals that the people behind WSR have received 500 thousand shares for their research. The second one was published last month and according to the fine print, a further 1.5 million shares was transferred to WSR as compensation. For the sake of objectivity, we must note that this stock is restricted which means that there’s no immediate danger of Wall Street Resources selling them and depressing the price. However, we decided to look into their track record and see how good they are at predicting the future.
They are kind enough to keep their old reports on their website and we stumbled upon the one that they published about Panache Beverage Inc (PINK:WDKA). It went out back in December 2011 and it sounds just as optimistic as the one for WTII. It also gives WDKA a one-year target value average of $2.67. WDKA has not gone anywhere near those sort of prices and instead, they were at just $0.60 exactly twelve months after the report came out. Right now, they are hovering around the $0.40 mark.
And it’s not like Inside Bulls who sent us an email about WTII yesterday are more trustworthy, either. They were part of a huge pump on Transfer Technology International Corp (PINK:TTIN) that was started not more than a couple of weeks ago. As you can see from the chart of the right, TIIN’s shares have lost around 70% of their value since then.
TTIN is a great example of too much publicity affecting a stock in an adverse way. That’s why you should be careful when considering the risks involved in a potential investment in WTII in the coming days.
