For a forth trading session Telkonet, Inc. (OTC:TKOI) stock continued its climbing up from where it stopped the previous day, closing the market far above its trading channel. New funds secured, along with some recently disclosed stock promotions and considerable shorting volume seem to have caused the sequential jumps.Telkonet stock added another 14.29% yesterday, after opening again at its previous close. Over one million shares were traded, a record for this year and more than five times the average volume, and the closing price of $0.24 broke also all recent resistance levels. The shares are overbought, and there are some events this week that could have made them highly demanded.
The large volume gain over the last days must have been supported by some stock promoters. Two different stock promoting websites disclosed on Friday to have made promotions for TKOI stock. Supposed, they both did not get compensated, however they state that their owners and writers might have positions in the stocks they promote.
On Monday this week, Telkonet filed the raising of $1.34 million in cash from a private placement of 265 shares of convertible preferred stock and warrants to purchase 5.1 million of the company’s common stock at an exercise price of $0.13. With a working capital deficit of $4.3 million and a cash position of $53,000 at the end of March, the additional cash will barely cover the outstanding current indebtedness, not to speak about the $3.2 million long-term debt.
The company owed money even to the members of its Board of Directors and has as as regular practice to repay them with stocks. The filing from Monday also stated that some directors again converted the outstanding indebtedness of the company owed to them into a total of $1.8 million shares of common stock at a conversion price equal to $0.36 for a share.
It seems surprising that the market perceives these facts as good news, ignoring also the dilution risks arising from the outstanding warrants and from the other debt in the form of convertible debentures. Though, it seems that the news are not good for everyone, as over the last four trading days a large part of the trading volume was made up by shorters, reaching 46% shorted shares on Monday.
