As editor-in-chief of a high-ranking penny stock website, people talk to me. They ask questions. And today’s hot penny stock issue comes from a friend looking for advice.
My friend was on the receiving end of the usual “buddy stock tip”. And he asked me about this ticker symbol and said,
“Would you buy shares? What do you think?”
Now, I’m no E.F Hutton, but people tend to at least consider what I have to say as I’ve proven myself right more than once. Here’s my 2 cents…
Bollente Companies (BOLC)
Initial impression- slick website, ok press releases, and what appears to be a cool home-tech product (with what should be high margin).
I actually wouldn’t mind one of their tankless water heaters in my house, so I clicked on “buy now” and I learn I don’t get to actually buy a product.
Now that’s strange isn’t it? Instead I get this screen-
Well, I figured I’d see some models and pricing, but apparently we don’t get that info. I clicked on the “contact us” in hopes of finding a list of installers and was disappointed as it’s just a data collection screen.
That’s not really what I’d want a consumer to see on a company I held stock in… that’s for sure.
But, the good news for shareholders is the company did receive the 2014 IBS home show “Best Home Technology” award. So that does make me believe there is an actual product somewhere- it’s just not available yet- or their website is not designed for ecommerce.
Unfortunately, this is the good news…
From a financial standpoint, I can tell my buddy there are much better places to invest. Just looking at BOLC’s SEC filings I found these red flags-
- No Revenue
- Accumulated deficit of nearly $5m
- 2013 Net Loss of $1.7m
- During the month ended November 30, 2012, the Company issued a total of 500,000 shares of common stock as part of a consulting agreements totaling $1,325,000.
- Outstanding shares jumped almost 50% from 6.4 m to 9.7m in 2013
As you can see, there’s little positive to like about in regards to the financial condition of this company. With no revenue since going public (2008), there’s no question how they’ve racked up such a deficit.
And BOLC management obviously pays consultants heavily in stock, and take a real paycheck for running a company that doesn’t make money.
Now, here’s where it pays to read the fine print-
Digging deeper past the numbers, I found that Bollente owes on a promissory note that’s due on February 24, 2014. So with just $68,412 in cash on the books, how can they pay off this note?
Enter common stock-
The company can simply issue more shares of common stock to raise capital. That is, if someone will buy it. Given the company only has 9.7m shares outstanding of a possible 100m shares. That leaves an opening for a lot of dilution.
That’s where the current stock price comes in. Take a look at the chart below to see how far and fast the stock has rallied…
BOLC has risen from just around $1 in June 2013 to almost $4.00 as of yesterday’s close. That’s a gain of 300%!
And the stock only trades 2,700 share a day…
This kind of move on nothing more than press releases is something we often see in stocks that are under a paid promotion agreement- aka, pump and dump stocks.
Now I’m not accusing anyone of pumping this stock, but it’s a bit odd that the market would see value in a stock with $0 revenue and a product that is not for sale on their website, and something that’s already available on the market in other forms (tankless water heaters).
But what of the stock price when they issue another 10m shares to pay off debt and keep taking a paycheck until they get a viable product? Well, that’s where the stock price tanks as new shares hit the market.
So, to answer friends question-
I’d say there are plenty of stocks in the $4.00 per share range that generate plenty of revenue and have cutting edge products. And until, more like if and when, BOLC can turn an actual profit- I’d definitely avoid putting these shares in my portfolio!
Keeping you one step ahead,