In this piece I will analyze three essential components and share my thoughts with you as to why they are crucial in this context and to US Wireless Online (PINK:UWRL) investors.
Recent News Release
U.S. Wireless Online, Inc. (UWRL) Comments on Recent Stock Price Volatility (Source: http://yhoo.it/9rbRlT)
HENDERSON, NV, U.S. Wireless Online, Inc. (UWRL.PK) today commented on its recent stock price activity in the Pink Sheets market. “We have noted the trading in our stock in the last few weeks,” said Michael York, UWRL President “We feel that the activity is out of line with the Company’s potential are therefore going to investigate the trading activity in the Pink Sheets.”
Bold Statement. Management is aware that a declining share price will not fetch well with investors, or attract traders, for that matter. The intonation implies that UWRL principals will work to resolve the issue. Resolving the issue equates to boosting the share price which equates to the return on investment (ROI) traders & investors seek.
UWRL also asks that shareholders or other having any information that might be relevant to send it to the Company through its investor relations firm at www.minamargroup.net/helpdesk. On Tuesday, UWRL introduced a potential merger with Canadian company Welcome Place (http://www.welcomeplace.ca/ ). Welcome Place provides customers with software and training to teach individuals how to become successful day traders in the futures market. Negotiations are currently underway between US Wireless Online Inc. and Welcome Place, and due diligence on the company is being conducted. UWRL is optimistic about future success of Welcome Place.
“We also wish to emphasize that our development is proceeding as planned and that we intend that there will be no dilution in the equity of the Company. We are also meeting on Monday with our advisors to address this unwarranted and substantial share price decline.
This statement implies that not only is management aware of the share price situation, but that they also intend on helping the situation or resolving it as soon as possible, which is in the best interest of shareholders.
The company confirms that it is not engaged in any sort of dilution and encourages its shareholders to report any unusual trading activity or cross trading or anything irregular to the US regulators. UWRL is monitoring the situation.” A source close to UWRL noted.
The company reminds its shareholders and followers that UWRL was a company in duress obtained through a Nevada court custodianship. UWRL’ “in peril” days are long gone and well behind it. UWRL is a great robust and up and coming company. We remind our followers that Go Green Electronic Recycling; USA based company (current subsidiary) and the Canada based Welcome Place (targeted merger candidate) will be the two secondary operating subsidiaries. They show great future appreciation and potential. The “Main” China based subsidiary remains still to be announced. The mandate for our M&A consultants are to locate an operating company with revenues in the 5 to 10 million dollar range with assets of the same.
Punchline. The ‘good’ stuff. Notice the company understands that in order to market to investors it must give the market what it wants. This news release did just that. Let’s recap: (1)the company reassured shareholders that they are aware of the situation, (2)stated that management will take action to resolve the issue and increase share price to accurately (subjective) reflect the value of US Wireless Online,(3)gathered the interest of new and prospective investors by hinting on significant shareholder value with an up and coming merger, one which has yet to be announced.
Several such candidates have been identified with UWRL agent still in China reviewing and conducting due diligence on the targeted merger companies. In view of the recent price fluctuations this main China merger may be announced any time by the UWRL management to assist the oversold traders cover their positions.
And the company ends off by saying, “don’t turn your back on US Wireless Online, because once the gears are in motion, you’ll regret having done so in the first place”.
Technical Aspect
Technical investigations into the trading patterns of OTC-listed stocks are often arbitrary. The purpose of technical analysis in this context is to grasp the ‘big picture’. The key supporting level appears to be $0.0015; pivotal resistance lies at $0.003.
Most importantly, how would you describe the price/volume relationship in this market? Does volume favor movement to the upside, to the downside, or is volume at a standstill? Following Thursday’s session (June 3rd, 2010), US wireless jumped 33% on the largest one-day volume in its history.
This, itself, suggests that interest towards US wireless Online has increased significantly, amongst investing & trading communities.
Valuation
How much is US Wireless Online worth? If we know how much this company is valued at, we can propose a realistic valuation and translate that to a fair market valuation (pps). At this point our knowledge of this holding company’s assets is limited. However, Us Wireless Online stated in their release that “The mandate for our M&A consultants are to locate an operating company with revenues in the 5 to 10 million dollar range with assets of the same“.
The company previously announced the acquisition of “Go Green Electronic Recycling”, and are in negotiations to acquire “Welcome Place”.
Assume, collectively, these three acquisitions (once finalized) will account for $10M in sales; $10M in shareholders’ equity. With a modest 1X sales multiple or at book value, US Wireless Online would require a capitalization of $10M.
Therefore, we derive a low-end valuation, with an assumption based on the statements that the company has issued:
$10M/2B O/S (assume there are 2B shares outstanding, otherwise the ‘authorized’ count: http://bit.ly/8ZBETL) =$0.005/share
On the high-end, implement any sales or book value multiple that you believe justifies the potential value of this holdings company. That could translate to a price per share of $0.01+
Another useful study is benchmarking. Pull up any chart on a Mina Mar counterpart, for instance, GoIP Global, Inc. (GOIG) and you will find a stock with a similar share structure to UWRL, but one that has already rallied over 6000% (in a matter on a few months). Who is anyone to say that US Wireless Online will follow in suit? While uncertainty exists in every market, we do the best we can with the information available to us, and the trends that envelop the markets. I am of the opinion that US Wireless Online is yet to see a significant upside.
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