Extreme Biodiesel Inc (OTCMKTS:XTRM) Appears Determined to Continue North

On February 4 Extreme Biodiesel Inc (OTCMKTS:XTRM) announced the formation of their new subsidiary that should lead the company into the cannabis industry and, as you can clearly see from the chart on the right, this was just what they needed to get their stock out of the sub-penny levels.

The market’s reaction was immediate and in just two days, the ticker ran from as low as $0.004 per share all the way up to $0.0249. It then slipped and fell rather hard, wiping out 43% of its value in a matter of just three sessions, but, as we mentioned in our previous article, it had absolutely no problems bouncing back up. The current climb isn’t as explosive as the first one but it does seem relentless.

After adding another 13% in six and a half hours of trading, XTRM closed Friday’s session at $0.0339 and today, it seems to be doing even better. Just forty-five minutes after the opening bell, it has already broken through the $0.04 barrier while the number of shares that have changed hands so far exceeds 10 million. All in all, not a bad performance for a ticker that was struggling to register more than $50 thousand in dollar volume until a couple of weeks ago, but what is fueling it? Is it still pushed up by the excitement spurring out of February 4’s press release? Or is there something else propelling it towards the higher end of the charts?

After entering the marijuana business, XTRM were quick to make two more announcements. On February 6, just two days after the initial PR, they informed us that they have completed assembly of their first mobile hemp to biodiesel production unit. Then, on February 10, they said that they have received pre-approval for a $5 million line of credit. They announced that they’re going to use the money for purchasing real estate and less than twenty-four hours later, they gave us some more details. Apparently, they have opened an escrow on a 40-acre parcel in California where XTRM will one day cultivate and grow both hemp and marijuana.

You can see that there’s no shortage of good news, but we should note that they have always been a bit too optimistic about the future. As you can see from this article, eleven months ago, when their stock was traded under the BRKM symbol, they were saying that the demand for biodiesel will explode and after that they made some extremely positive announcements about the acquisitions of companies that were supposedly “profitable” and “established“. The whole enthusiasm resulted in a 50% drop in revenues year-over-year.

We reckon that it’s well worth considering these things, but there’s one more factor that adds another layer of risk. As you can see from our database, we have received around ten emails since XTRM‘s pot stock transformation. They’ve been sent by a number of newsletters and the total amount paid for the pump hovers around $35 thousand.

One of the outfits taking part in the campaign is called Stock Market Media Group who are also trying to keep the excitement going by publishing optimistic articles every now and then. Curiously, when you open the disclaimer on their website, you’ll fail to find any compensation disclosure for the campaign, but if you check out the fine print under the emails, you’ll see that they’ve been paid $1,500 for raising awareness around XTRM.

As we wrote earlier today, Stock Market Media Group are also a part of the $1.1 million pump for Great East Energy Inc (OTCBB:GASE) and back on February 3, they tried to tout one of the worst promotional disasters of 2013 – Pan Global Corp (OTCMKTS:PGLO).

The rest of the pumpers’ track records are pretty horrific as well, but the thing that should really worry you in the case of XTRM is the fact that, at least at the moment, the company is unable to show us any concrete results from the ongoing operations. The future financial statements will probably answer a lot of questions and they should reveal whether the current market cap ($24.3 million) is justified or not. Until then, treading carefully and considering all the risks is absolutely essential.