Gawk Inc (OTCMKTS:GAWK) Steps on the Accelerator
Gawk Inc (OTCMKTS:GAWK) started off as Media Mechanics Inc a couple of years ago and its original idea was to provide search engine optimization services. That didn’t work and after a name change and a 30 for 1 forward split, the company said that it will try to make an impact on the online content distribution market. That didn’t work, either.
In a last-ditch attempt to save the company, Scott Kettle, GAWK‘s CEO, appointed some new people to various positions, completed a few acquisitions, and said that in addition to the content distribution business, GAWK will also be providing various IT services mainly related to cloud storage.
By the looks of things, he finally managed to steer the company in the right direction with this decision. Plenty of deals have been announced over the last year or so and recently, GAWK even closed a contract with Hemp Inc (OTCMKTS:HEMP) which, though a controversial company, is a familiar name to virtually all penny stock investors. In a word, there’s been no shortage of good news.
That’s not all. Last month, GAWK proudly announced that during the three months ended July 31, they have logged their most successful quarter yet. Indeed they have. Here’s what the 10-Q looks like:
- cash: $44 thousand
- current assets: $1.4 million
- current liabilities: $7.4 million
- quarterly revenues: $558 thousand
- quarterly net loss: $256 thousand
The 10-Q is far from perfect, but the revenue jump is massive which goes to show that GAWK might just be onto something with the cloud storage solutions.
Unfortunately for Mr. Kettle and the rest of the management team, investors have proven to be hard to convince. In fact, the performance since the announcement of the new business plan has been extremely shaky. Between December 5, 2014 and February 26, 2015, GAWK plummeted from a 52-week high of more than $0.14 per share all the way to just a third of a penny. It did try to recover over the next few months, but it failed and in August, it once again dropped below $0.01.
Now though, it seem to be more determined than ever to claw back some of the lost ground. On Monday, GAWK exited sub-penny land and yesterday, after a huge 81% jump, it reached $0.02 per share. It would appear that thanks to the combination of promising press releases and financial reports, the stock has finally left its rough patches behind. Plenty of people around the message boards seem convinced that there will be nothing stopping it from now on.
That could turn out to be the case if the management team succeed in dealing with issues like the colossal working capital deficit and the dismal cash reserves. Even if they do that, however, the ticker will still be in danger if someone were to unleash a huge amount of stock on the open market. Sadly, this doesn’t seem entirely unlikely.
Remember the search engine optimization business we talked about in our first paragraph? Back then, GAWK (then known as Media Mechanics) was trying to have its stock listed on the OTC and as a result, it offered some shares to the public. It sold precisely 2,500,000 shares at a price of $0.02 apiece.
Remember the 30 for 1 forward split which we also mentioned in our first paragraph? Thanks to it, the people who bought those 2,500,000 shares suddenly found themselves in possession of a whopping 75,000,000 shares of GAWK common stock for which they paid only $50,000. They could still be holding on to some of these shares.
