OWOO Quarterly Results
Here are a few observations of the latest 10Q -
Cash on hand dwindled down from $4371 to $117 for the quarter (time to cash in the Happy Meal Coupons...)
Total assets over the quarter, including nominal cash noted above, got reduced from $470k to $376k (a reduction of 20% loss on assets)
Total Liabilities increased by $368k (an increase of over 8% bringing the total up to over $4.8 million)
Good news on the sales front, jumping to $27k in gross sales, resulting in a net positive margin after cost of sales of 33% (or $9k). Note: using the HEB sales price of $19.99, the gross margin on each doll translates into $6.70/doll.. Using the price range of $19.99 (HEB) to $24.99 (doll genie), the company racked up anywhere from 1075 to 1344 dolls sold for the quarter.
The not so good and rather ugly news: Loss from operations, including selling, G&A, R&D, and Depreciation jumped from $551k the previous quarter to a whopping $3.9 million for the most recent quarter - putting it another way, the Company spent anywhere from $2922 to $3650 per doll to attain those stunning sales figures!
OWOO is racking up payment of these debts by issuing convertible debt. For the quarter, the Company states that "At June 30, 2014, the convertible debentures and related accrued interest payable were convertible into approximately 167,035,000 shares of our common stock" - this compares to "only" 22.2 million for the previous quarter - a jump of 650% giving new meaning to the "Dilution Zone". Subsequent to June 30, 2014, they incurred additional indebtedness totaling $82,500, consisting of convertible debentures totaling $77,500 and short-term advances of $5,000.
On another sober note...Interest Expense is beginning to be the new albatross for the company - from the last quarter, interest expense has doubled to $848k for the current quarter. On top of that, the company incurred a $584k loss on a debt settlement (yikes!).
Probably the most important indicator of the health of the Company is the working capital deficit of $4.5 million, racking up the accumulated losses from inception to over $14.4 million. The working capital deficit is real money the company needs to come up with to continue executing their business plan. The only way to do this, not including the diminimus contribution of the doll sales, is to issue yet even more convertible shares. Lather, rinse, repeat....the company in fact states: "We believe that our operating expenses will increase over the next 12 months and estimate that our capital requirements for the next 12 months will be exceed $1.5 million" - however, also in the quarterly report, it states: "As indicated in Note 5, several of the convertible debentures are delinquent as of June 30, 2014."
The company is also issuing 5 million newly minted Series BB Preferred Stock (convertible at 50:1 common shares) to further alienate existing shareholders.
