CD International Enterprises Inc (OTCMKTS:CDII) Approaches Record Lows

The stock of CD International Enterprises Inc (OTCMKTS:CDII) is once again forming a devastating downtrend after logging increasing losses for the past four sessions. Friday’s drop was particularly painful – in just a single day the company saw nearly 30% of its value disappear. Currently CDII‘s shares are trading at $0.001, on the verge of the triple zeroes and just a nudge above the 52-week low of $0.0009.

Seeing such an abysmal chart performance for a company that in December announced receiving a purchase order with an approximate value of $350 million that was followed by a purchase order with a potential value of $200 million in February may seem quite strange at first. Taking even a single look at the latest financial report and the negative sentiment becomes quite understandable – CDII finished the quarter ended December 31, 2015, with:

• $150 thousand cash
• $184 thousand total current assets
• $17.4 million total current liabilities
• $34 thousand revenues
• $12.5 million net loss

Compared to what the company reported at the end of 2014 the balance sheet showed a 70% decline in the generated revenues while the net loss increased from less than $500 thousand to over $12 million.

The abysmal financial state is just the first in a very, very long line of red flags. Last year the shareholders of the company were simply drowned in dilution. CDII were printing fresh shares at such speed that from September 30, 2015, to December 31, 2015, the outstanding shares grew from 100 million to 508 million. Back in Ferbaury CDII did file a complaint against three entities and two individuals for the alleged illegal and unregistered resale of 220 million shares of restricted common stock but the fact remains that the issuance of new shares has barely slowed down – as of March 8 the company already had over 700 million outstanding shares.

The dilution may not be stopping any time soon. At the end of last year CDII still had $2.2 million in short term loans and convertible notes while back in March the authorized common shares were increased from 1 billion to 2.5 billion.

The fact that after the closing of the share exchange agreement for the acquisition of China Manor Assets Investment Management Company, Limited, a Cayman corporation, the voting control over CDII was now in the hands of Mr. Xiangjun Wang, the sole shareholder of China Manor, doesn’t seem to have boosted investors’ confidence in the stock. 

Trading CDII‘s stock demands the use of caution. Do thorough due diligence and never put unaffordable sums of money on the line.  

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