Market Movers: Currencyworks

The Bitcoin trade is back on, so here comes Currencyworks (TSXV:CWRK) on the climb to $0.245 from $0.05 on 10 million shares worth of volume over the past two days. It’s like the market decided that the 2017 narrative about blockchain tech evolving beyond ledgers that facilitate currencies is more believable now that there’s a bid under bitcoin.

According to the literature, this company is something of a bespoke blockchain designer. It develops custom blockchains and fintech products for whichever company wants to pay for it. The sudden action on CWRK, combined with a boilerplate news release about not knowing why the stock is up, indicates that the company might be in discussions with someone about building a custom ledger for something or other which, if worked into a commercially successful product or process, will be a first.

The lone services agreement listed in Currencyworks’ MD&A is with RYDE Holdings, the creator of KodakCOIN, the digital currency of the KodakONE image rights management system that legacy film company Eastman Kodak Co (NYSE:KODK) was developing the last time the market believed in blockchain, before Kodak went into the coronavirus vaccine business… (briefly). Neither KoakONE nor KoakCOIN ever launched, and is light on details about how the system is to work or when it will launch. It’s part vision board, part About Us page for RYDE.

Logo for KodakOne image rights management, which promises to reward (financial) creativity. Used WITHOUT permission!

Currencyworks’ website lists a few more projects, including Bitrail, a payment network that uses altcoins instead of credit cards, and Freedomcoin, the altcoin that bitrail facilitates. There’s also a developing fine art certification tech meant to cut down on art fraud, which sounds promising, assuming it can be developed to the stage that it works, and doesn’t get exploited as a plot device in a reboot of The Thomas Crown Affair. Maybe they can work it in as a product placement.

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And when the sexy appraiser lady uses the tech to authenticate the painting before they start the auction… it’s a forgery! But it can’t be! She knows it’s not! Did Crown pull a switcheroo with the ledger?

None of these relationships generate any significant revenue (CWRK reported $25,000 in revenue in the trailing three and nine months ending September 30, 2020), so the company finances its ongoing operation through loans.

There are 34.9 million shares outstanding on CWRK’s September 30th cap table, but the company owes about $1 million in convertible debt, and another $434,000 to a related party. $277,000 worth of the convertible debt is convertible at $0.03, to make for 9.2 million shares so far (it was still collecting interest at 8% September 30), and another $334,000 worth of debt is convertible at $0.10, into 3.34 million shares.

A beautiful looking 1 year chart of the bitcoin price, courtesy Coindesk
…And an ugly one of CWRK’s stock price courtesy stockwatch. (Cut them some slack, though. This is new action.)

All told, it makes somewhere in the neighborhood of 47 million shares outstanding on a diluted basis, a million or so in debt, and an information vacuum sucking the stock price up by virtue of what appears to be a very thin float.

The fashionable fascination with blockchain tech is one of the more amusing phenomenon of this modern venture market ride. On the last go-round, it was something ready to explode as soon as the public realized what it does, but fell apart when the public realized that, for all practical purposes, what it does is sell stock.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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