Writ Media Group Inc. (OTCMKTS:WRIT) Surges Onward
tags: WRIT
Writ Media Group Inc. (OTCMKTS:WRIT) was stirred from illiquid obscurity a week ago by the news that it had acquired another company, and has been climbing the charts at an impressive pace ever since then. So what’s wrong with this picture?
Seasoned investors know to be on their toes in similar circumstances, and WRIT is a perfect example of why this is the right attitude in such suspicious cases.
One doesn’t need to dig deep to come to the conclusion that something is very wrong with WRIT‘s situation. A glance at the company’s profile page ascertains that as of about three months ago, it had 25.6 million shares of common stock issued and outstanding. At this point, the eye of a perceptive investor would drift a bit further down, to discover that just 6 months before that, the company had performed a 1 for 200 reverse split. A quick check reveals that ”The number of shares outstanding of our Common Stock is 2,309,056 as of December 14, 2015”.
This means that the company’s shares outstanding have increased more than tenfold in the few short months between the December 2015 and the February 2016 report. True enough, the fact that the company has performed two 1000 for 1 reverse splits in the last five years should be enough of a hint that this is far from a new practice for WRIT, but it is still shocking to discover the truth of the matter.
In light of all of this, it should also come as no shock for investors to discover that the source of WRIT‘s dilution is convertible debt, with “conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date”.
At this point, WRIT has obviously passed way beyond what you’d call “suspicious” and “risky”, but we urge investors to read on – because it gets much worse reach the actual balance sheets:
- Cash and cash equivalents – $0.2 thousand
- Total current assets – $0.9 thousand
- Total current liabilities – $888 thousand
- Notes payable – $265 thousand
- Net loss – $665 thousand
So, at the end of the day, what do we know about WRIT? Well, its share structure is a shambles, and has been for some years now. It has a lot of toxic debt, and not much else to its name. It has delayed the filing of its latest financial report – so we don’t know that its abysmal state hasn’t deteriorated even further.
With this in mind, WRIT‘s rise to prominence and current climb into dollar-land becomes more than a bit perplexing.
