One World Holdings Inc (OTCMKTS:OWOO) Logs Massive Gains in Record Time
It looked like One World Holdings Inc (OTCMKTS:OWOO) isn’t going to do anything during yesterday’s session. It was sitting pretty much flat throughout most of the day and the volume was all but non-existent. Then, about forty minutes before the closing bell, the company issued its first press release in just over two months and everything changed in an instant.
OWOO announced that they have signed a distribution agreement which means that their Prettie Girls! Teen Scene collection will be available in over 3,000 WalMart stores in a few months’ time. The management team presented the deal as a rather big achievement and, clearly, investors tend to agree. More than $100 thousand worth of shares was traded in the space of less than an hour and the stock was pushed up to a close of $0.004 per share which is 135% above the price at the end of Monday’s session.
But why is everyone so excited?
Well, once you have a quick look through the latest 10-Q, you’ll see that OWOO definitely needs a massive distribution deal because the company’s financial situation at the end of the first quarter of this year was absolutely atrocious:
- cash: $8,455
- current assets: $322,365
- current liabilities: $17,123,072
- revenue: $739
- operating loss: $498,064
The management team say in the report that the dolls are seasonal products and that, generally speaking, Q1 sales are slower. Seasonality, however, can’t explain the truly pitiful sales figure and it can’t serve as an excuse for the year-over-year revenue drop of 67%.
3,000 WalMart stores should give revenues a significant boost and hopefully, this will be enough to turn things around and transform OWOO into a profitable enterprise that brings value to its shareholders. Don’t forget, however, that the WalMart roll-out won’t happen until October which is more than three months away. And in Pennyland, this is a very long time.
Especially when you consider the dilution the stock has gone through. At the beginning of last year, OWOO‘s management team effected a 1 for 750 reverse split and in April 2014, about three months later, the number of issued and outstanding shares stood at just under 22 million. Right now, it exceeds 275 million.
As is often the case, one of the culprits behind the devastating dilution is called convertible debt. The details around the actual terms of the numerous debentures are scarce, but we do know that during 2014, OWOO issued nearly 160 million shares in order to satisfy about $1.8 million worth of debt. The effects of the stock printing are pretty visible and a couple of months ago, the management team decided to promise that they will do everything they can to stop the ticker from plummeting further down.
They announced that they are working towards eliminating most of the convertible notes from the balance sheet and promised that “our days of being funded by predatory lenders have come to an end”. They also said that OWOO will show “how well it can perform with the absence of excessive dilution”.
That announcement was made on March 31. Between April 2 and April 28, the company issued a further $96,660 worth of convertible debentures. Some of them can be turned into stock at a 50% discount while the rest carry a fixed conversion rate of $0.001 per share. Subsequent to March 31, OWOO also satisfied $27,462 worth of debt and interest with the issuance of 24,511,147 shares of common stock.