The previously promoted penny stock of Spiral Toys Inc. (OTCQB: STOY), a leading provider of mobile-connected, wireless entertainment technology, has been on a sensational run since the start of the summer, a run capped off by some very positive revenues reported. Just after the closing bell rang on Thursday, the Company reported their Q2, 2015 results which set the mark for quarters to come, being that they were the first, and provides for a bigger picture as the toy season of Christmas begins to near. When you think that STOY stock posted gain after gain despite being promoted during July, the transparency of updated filings could be the catalyst for it to break past $1.
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It was just this January when Spiral Toys took over the trading shell of Rocap Marketing Inc. (ROCP). Rolling in their LLC, Spiral Toys LLC formed in the State of California on July 12, 2011, the development of entertainment products in both physical toys as well as digital media has proven to be a seller after booking some $1,500,366 in net product sales for the 3 months ended June 30, 2015.
With high costs involved in the production of those sales, some $1,332,974 for the three months ended, the gross profit of $180,198 was barely enough to cover the salaries, wages and consulting costs for the quarter, resulting in a net loss of $830,580 for the period. How and where the financing to fund operations is the key to determining if STOY stock can remain to be as abundantly profitable for traders since their run from 0.45 began in mid June.
Within the updated filings are details of the $115,738 in convertible notes on the books as of June 30, 2015, an amount which saw no increases during the six months of 2015. The notes are designed in a manner that no cash repayment will occur until Spiral Toys has been able to raise at least $2 million in financing, yet the holders of the notes may convert their amount owed into shares of STOY stock at a rate of $0.25 per share.
Subsequent to the end of the three months ended June 30, Spiral Toys did close on a portion of their $1,500,000 private placement offering for STOY shares at a purchase price of $0.45. As per the Q filed yesterday, subscriptions for approximately 540,000 shares equal to $243,000 had been received, however, the Company had not yet completed a closing on them.
Understanding that financing is part of the game, a game some OTC listed companies do for the mere purpose of selling notes to toxic debt financiers until the AS is maxed out and can be increased, Spiral Toys looks to be playing to part of a future uplister or acquisition target. Having launched CloudPets, the company’s flagship line of connected, interactive plush toys, supported by a $9.6 million partner-funded television and digital advertising campaign on major children’s networks, including Nickelodeon, The Cartoon Network, ABC Family and Disney XD, a move higher would appear to be prudent.
Spiral CEO, Mark Meyers, has undoubtedly hit the ground running with CloudPets and the marketing schedule for rollouts to hit right at the peak season for creating Christmas wishlists and the annual post-Thanksgiving Day shopping bonanza. With volume still trading in the $100,000 range during yesterday’s session and the 52WK High of 0.82 within reach, the report not just the revenues for the quarter, but of the extensive marketing plans Spiral Toys has should be sufficient enough, even in August, to continue to support STOY stock into the $1 range.
Find out more about STOY shares here: $STOY
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