Windstream Technolog (OTCMOKTS:WSTI) Suffers Another Correction
On the last day of March the stock of Windstream Technolog (OTCMKTS:WSTI) closed flat at $0.07 per share. Just six sessions later however the ticker had appreciated so much that it spiked to a high of $0.412. Investors were overly excited by WSTI’s PR that March was the best month in the company’s history.
Unfortunately all those who blindly followed the hype and jumped right into the stock without doing any due diligence quickly found themselves in a rather sticky situation as WSTI began hurtling down the chart at a breakneck speed. In fact out of the last thirteen sessions the ticker has been able to register only 4 green closes. After dropping down by another 5.3% during yesterday’s trading the stock is now sitting right back where it started at $0.071. This means that if you bought any shares at the high of $0.412 and are still holding on to them you are facing a loss of over 80%.
Although it may be a while before we see how profitable March really was what we do know is that for 2014 WSTI’s financial achievements are nothing short of depressing. The annual report filed just a couple of weeks ago revealed that at the end of December 31, 2014, the company could rely on the following:
• $594 thousand cash
• $5 million total current assets
• $9.99 million total current liabilities
• $1.7 million annual sales
• $11.3 million annual net loss
“Well, $1.7 million in annual sales are actually not that bad of a result for a pennystock”, you might say. Let us stop you right there however because in order to generate that amount of money WSTI incurred cost of goods sold of $2.3 million, or in other words, the company lost around $600 thousand through the sale of its products. At the same time year-over-year the net loss increased more than twice.
If you scroll down to page F-4 of the annual report you will see something rather strange – apparently WSTI have an unlimited amount of authorized shares. This means that company could issue new shares indefinitely. Now keep in mind that at the end of 2014 there were around $3 million convertible notes payable followed by additional $540 thousand worth of notes sold after the start of 2015. The holders of these notes could receive millions of discounted shares and some of them have already began doing so – on April 7 WSTI issued 4.6 million shares as a conversion of $163 thousand of debt at a price of $0.035 per share. Just three days later the same amount of shares was issued at a much lower price of $0.025 each.
WSTI’s sudden move upwards was far too much for the company to support at the moment. Without some solid progress being reported the stock will remain an extremely risky choice for investment.
