Wednesday, 8 May 2013

Arrowhead Water Products Ltd. CVE:AWA $0.015

Arrowhead Water Products Ltd (AWA) is a micro-cap company which recently sold its active business and all of its assets to the Ice River Springs Water Company. This will result in a company that holds only cash as an asset. The company has indicated they intend to pursue other business, so you're depending on their ability to merge their company with another or acquire assets at a fair price. However, their current market cap of $217,000 (I said it was a micro-cap) is substantially less than expected amount of cash they'll have after all payments relating to the sale are received. Their last MD&A indicated net cash proceeds of $750,000 after accounting for liabilities associated with the sale. That cash and their listing on the TSX-V exchange should make them an attractive way of going public for a small private company, as IPO markets are basically shut down right now for junior companies in Canada. Thus, they have both cash value and scarcity value. I expect a share consolidation and merger with a private company within the year. This is definitely a situation where a limit order should be used, as the stock is extremely illiquid.

Disclosure: No position at time of post.

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