Traders who are actively buying penny stocks that have been diluted in June and July have been tuning in on 4Cable TV International, Inc. (OTCQB: CATV) for very good reason. The makers of the PowerMiser amplifier have been extremely quiet since February when they brought in a new VP to boost sales while, at the same time, toxic debt holders have taken down CATV stock from $0.10 to as low as $0.0015. With Friday’s soft bounce and almost $100,000 in volume ($99,292) to end the week where over 140 million shares traded, the anticipation of the upcoming Q filing and a news release may be all the subbie needs to broadcast a multi-bagger run.
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4Cable TV International is a development stage, global manufacturer of outdoor equipment for cable and broadband transmission providers. The Company’s main product, the PowerMiser, is an amplifier line reduces the power requirements for most amplifier types by 50% or more. The revenues from Q1, 2015, $112,290, less than 50% of what they were the same period prior, is enough to produce a gross profit large enough during the three month period ($8,721) that a family of four could afford to go on vacation to Disney World for 3-4 days if they bought just one souvenir each and shared meals while dining out.
When a company, 4Cable TV International or any other one, fails to be able to produce sufficient net income from sales to support their operational costs, the options for continuing to finance the planned business model become very limited. Some companies will receive loans from directors with fixed terms in order to pursue the dream, but others who have a snowball’s chance of becoming that “must have” item producer will hit up, or be hit up, by the usual suspects list for convertible debt financing – a move which seasoned traders are familiar with playing.
Looking into the last Q filing (the period ended March 31, 2015) for 4Cable TV, the earmarks for CATV shares to be issued made it appear as if only 14,556,579 were due to be issued for debt conversions (Page F-8). On a subsequent page (F-13), a schedule showed that only $124,000 of net convertible debt was on the books at the end of the quarter which could lead those who are unfamiliar with how these deals are recorded to have bought CATV stock way too early.
Within the details of 7. Convertible Debt off the filings, the list of usual suspects appears bright and clear:
- $88,000 to Typenex Co-Investment, LLC;
- $54,000 to KBM Worldwide, Inc;
- $55,000 to JMJ Financial;
- $66,000 to LG Capital Funding, LLC;
- $54,000 to KBM;
- $26,500 to LG;
- $55,750 to Auctus Private Equity Fund, LLC;
- $31,500 to Adar Bays, LLC;
In the 15 months ended March 31, 2015, 4Cable TV International got cash proceeds of $235,000 during 2014 and another $151,000 during the three months ended March 31, 2015. All of these monies were given based on variable conversion rates for shares of CATV stock which range from 55% to 70% of the average market price of the three lowest trading prices in a range from 10 to 25 trading days preceding conversion. With just 300,000,000 shares authorized and 50,131,639 issued and outstanding as of May 15, that “fully diluted” cap has to be near its breaking point by the time the next Q is filed.
A kind of “show me your cards” hint was issued a month ago when Typenex Co-Investment, LLC and LG Capital Funding, LLC each filed 13Gs showing 5,008,150 and 6,052,758 shares owned, respectively. The display led some to believe that the just below 10% ownership allowed indicated that the issued and outstanding was still what was listed as of May 15, yet those who trade to profit were not yet prepared to buy into CATV stock just yet.
On July 1, CATV stock closed at $0.0218 with $379,367 in volume traded. During the next 4 trading sessions, CATV shares closed at $0.0094, $0.006, $0.004, and $0.005, respectively, and have failed to close above $0.003 on all but three trading sessions since. Considering how the conversion terms work and the total amount due to be converted into CATV stock existed, not only will a clear look at what’s left be of value when the Q hits, but a news update and the bottom riding buyers under $0.018 will be geared up for what is likely to be a 2X to 4X appreciation from the “buy the 1’s” approach.
Find out more about CATV shares here: $CATV
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