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Thursday, July 16, 2015 2:31:59 PM
First, for any stock, you must separate falling in love with the product vs. the stock price - just because a company may have a good product, a World Class Management, deals lined up, etc....the stock price is strictly a function of supply and demand and what the market is willing to set for its benchmark. In the OTC world, as you have observed, many companies are B.S., yet have a stellar stock price that is not reflective of its actual product (if any).
So setting aside Walmart, Toys R Us, HEB, Fiesta, Dollgenie, Oprah, Movie deals, Michelle Obama, politics in Iran, etc... - one must look at the current share structure for the first hint of answering your question.
The Company early on made the rookie OTC mistake of shelling out millions of shares for PR services and other frills to toxic lenders. When those notes came due, instead of being frugal with what little cash they had, they went on additional spending sprees and refinanced those notes into even more notes on even lower share price conversion rates to kick the proverbial can down the road. Eventually, the company was put into a position of continuing that cycle into the "billions" of shares, or let them try to convert, take their lumps, and move on. The company did neither - they instead refused to honor their loans and let several (4 that we know of) go to litigation to kick the can a little further down the road in the interest of "protecting shareholder value" - the fallacy with this approach is that they are taking a gamble hoping that the stock price will go up (i.e. the eventual conversion will take fewer shares) when they are eventually forced to honor the contract thru court order, or face the consequences of yet an even bigger dilution if the stock price goes down.
The only way out of the above cycle is thru actual sales of their product and they must do so at a significant clip while maintaining a hefty margin. The problem they are faced is that even with a huge Walmart or other retailer purchase order, the Company does not appear to be able to sell them at a reasonable margin (if any). Simultaneously they are faced with an ever growing and ongoing interest expense that requires the immediate need to raise cash (thru more toxic debt) - the cycle never ends.
The early mistakes of the company, no hard they actually try (or present a perceived effort to try) is a death spiral. In fairness to the Company, many startups face this same dilemma of trying to outspend their way out of a hole. The lesson learned here is that the company's only real currency is its shares available to raise capital to start up and run the business....it is critical to protect that share count at the expense of growing too fast, This company has failed to do that.
Remember - it (the stock price) was never about the Dolls
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