Chuma Holdings Inc (OTCMKTS:CHUM) Picks up Speed
Chuma Holdings Inc (OTCMKTS:CHUM) first attracted investors’ attention in January when a certain Mike Norman pocketed some money and created a wonderfully colorful landing page that was full of charts, bold statements, and unrealistic price targets. The pump did have a short-term effect on the ticker and it did move north. Unfortunately for Mr. Norman, the company was quick to react.
A few days after the beginning of the campaign, a press release was issued with which CHUM disclaimed any involvement with the promotion. The management team said that instead of putting their money on the line because of a few optimistic price targets, investors should base their decisions solely on what is in the company’s SEC filings.
That is a really solid piece of advice from CHUM and they do deserve a pat on the back for it. As it turns out, their press release was enough to put Mike Norman out of the promotional business. Shortly after it was published, the landing page was taken down and we haven’t heard from Mr. Norman ever since.
Unfortunately, as a side effect, CHUM‘s stock suffered. A few heavy blows brought it from over $1 per share all the way down to less than $0.40 in a matter of just over a month, and then, after the volumes dried up, it completely lost the will to live.
A 52-week low of $0.15 was reached on August 6 and thanks to the all but non-existent volumes, it spent the better part of the next three weeks going absolutely nowhere. Now, though, it seems to be marching strong.
It got back to its feet in September and although trading was pretty slow at first, CHUM has been picking up the pace lately. In fact, the last red session was logged almost three weeks ago, and although double-digit gains are a rarity, the ticker managed to reach a hefty $0.46 at the end of yesterday’s trading. It definitely looks like a nice run, but there must be a reason for it. What is it?
It’s all because of a series of optimistic press releases that CHUM started pumping out in September. After a full six and a half months of silence, the company’s PR department suddenly juddered to life and it began pushing out good news. The press releases mostly talk about some laws related to the medical marijuana business and they’re somewhat lacking in the “new information” department. The latest one, for example, discusses the revenues CHUM recorded during the three months ended May 31 and these figures were officially reported a full two months ago.
Investors don’t seem too bothered about this and they are buying. But aren’t they overlooking something?
They might be disregarding the advice none other than CHUM gave them a few months ago. The press releases sound positive enough, but real due diligence is done by reading the SEC filings and unfortunately, the picture there is a little bit different. Here’s what the latest 10-Q tells us:
- cash: $2,538
- current assets: $196,860
- current liabilities: $872,096
- revenue: $97,327
- net loss: $247,515
There are positive things about the report like the record-breaking revenues, for example. The rest of the statement is pretty appalling, however, and before you invest, you really have to think about whether the figures above can justify a market cap of over $30 million.
You also have to think about the people who received 22,500,000 shares as a settlement of $22,500 worth of debt a couple of years ago. They could still be holding on to some of the stock and they could be eager to get rid of it on the open market.
For the record, this is a danger we talked about a full nine months ago.
