The Russell 2000 led the race this week, notching up over 1%, All indices were in the green, with the DJIA just barely above break-even.
Impact. Highlighting Anomalies Amongst the Biggest Gainers & Volume Leaders. (SMIT & RWLK)
by Christian Galatti (Phase 4 Research)
The Reason that Schmitt Industries Had a 998x Rise in Volume (
– Inventories Could Support Growth.
SMIT had a huge volume spike for the week. Positive earnings made the promises of a profitable second half come true. The anomaly is that SMIT did the exact same thing in December. An enormous volume spike, and a stock that went above $3, only to ebb back over the next seven months…almost being pegged to a deal they did at $2.50 (link to raise.)
“We are working diligently to achieve profitability on a consistent basis in the second half of Fiscal 2018,” Hudson concluded. (December 13th, 2017. Link.)
But, the raise allowed Schmitt to build inventory. Inventory that was intended for growth that showed up this quarter, and could lay the foundation for the rest of the year. Possibly making this time different. Cash going from $2.9M after the deal to $2M built an additional $1.5M in inventory, going from $4.2M to $5.7M (MRQ.) The reason for the volume spike.
“With the successful completion of the Rights Offering in December 2017, the Company was able to invest in inventory which has allowed us the flexibility to ramp up manufacturing to satisfy increasing demands. We are encouraged that Balancer sales are once again in excess of the $2 million mark for the fifth consecutive quarter and that Xact monitoring revenues are at an all time high for the quarter and fiscal year. The Company’s operating and strategic initiatives are ongoing and include the evaluation of strategies for each of the product lines,”
The VA Policy Change Increases the Market for ReWalk (
– A Bridge to Product Delivery.
ReWalk had hit the low of the year before a one day 73% spike put it back to where it was in March. A company that’s part of the Robot theme has a future that was too far off for investors. Their soft exoskeleton to aid with paralysis isn’t supposed to be out until 2019, and must still pass regulatory review.
Anticipated delivery of a commercial ReStore soft suit is targeted for the first half of 2019. ReWalk plans to commercialize use of the ReStore system in Europe and the United States subject to receiving CE and FDA clearance, respectively, to market the device. The Company plans to apply for CE and FDA clearances once clinical and laboratory testing are completed.
There are a lot of paralyzed veterans. So the announcement that the VA changed its policy to help deploy exoskeletons gave RWLK a big new market if their products are approve, for ReWalk is already in there:
As a result of the revised policy, there are now 142 ReWalk certified private and VA SCI/D training centers across the US potentially available to train Veterans to use ReWalk. Furthermore, the network of VA SCI/D spoke sites may now be eligible to conduct training and provide additional opportunity. (link)
The company had developed the backing to not be delisted in May. With positive initial clinical data, and a larger TAM to sell into RWLK was able to reverse its course with one of the largest gainers of the week.
As previously disclosed, on May 15, 2018, the Company completed the first tranche of a private placement of ordinary shares in the aggregate of $20 million to Timwell Corporation Limited (“Timwell”), issuing 4 million ordinary shares to Timwell. The Company’s capitalization following this transaction, together with recent trading prices of the Company’s ordinary shares, enabled the Company to regain compliance with Rule 5550(b). With the Compliance Notice, Nasdaq informed the Company that it determined that from May 15, 2018 to June 5, 2018 the Company’s MVLS was $35 million or greater and the Company has, therefore, regained compliance with Rule 5550(b). (Link.)
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