Formcap Corp (OTCMKTS:FRMC) With a Bizarre Bounce
It’s been nearly three months since the latest promotional campaign for Formcap Corp (OTCMKTS:FRMC) started. As we mentioned in some of our previous articles, an entity called Paragon Development Inc hired a number of paid pumpers and splashed out nearly $68 thousand on inflating the stock’s value. The results of all the touting, however, were disappointing.
The ticker seemed reluctant to make a strong move and the low trading volumes suggested that investors weren’t going to fall for this one. The pumpers saw that nothing is really going to happen and abandoned FRMC on October 23. Rather surprisingly, that’s when the ticker finally started to move.
It was off to a slow start but once it got going, it seemed like there’s nothing to stop FRMC. Volumes picked up and, at the end of November, it found itself challenging the $1 per share mark. Even then, momentum seemed strong and it manage to break through it with relative ease.
If anything, the performance during the first three weeks of December was even more impressive. FRMC continued its unprecedented ascend and started to aim for the $2 levels. On December 19, it managed to briefly touch a 52-week high of $2.03 and although it closed the day a little lower, most people thought that FRMC still has some fuel left.
If you have been following our articles closely, you know that we weren’t quite so sure about that. As impressive as it was, FRMC‘s run was triggered by nothing more than a couple of optimistic press releases saying that the company is moving forward with the preparations for the drilling process at the Cowley County oil leases in Kansas.
The updates coming from FRMC‘s HQ sounded good, but they alone were never going to support the high price levels, especially considering the atrocious balance sheet. The drop that followed wasn’t that much of a surprise, but the rate was truly astonishing.
Between December 20 and January 3, the ticker managed to fall from a height of $1.92 to just $0.09. That’s more than 95% of the value gone after just nine sessions and it’s fair to say that it’s one of the worst performances seen from a stock that is not under the pressure of an active pump.
Over the last two days, however, we saw FRMC bounce and, once again, it’s doing it at a breakneck speed. On Monday, the stock jumped by no less than 133% and yesterday, it added another 76% closing the day at $0.37. At more than $400 thousand, the dollar volume is not to be sniffed at either and it suggests that a lot of people are keeping an eye on the ticker once again.
That’s all well and good, but the simple truth is that neither the horrific drop from the end of last year, nor the bounce that we’re seeing at the moment, seem to be caused by any immediately obvious reasons. In fact, FRMC‘s behavior is so bizarre, that even the management team appear perplexed.
After the end of yesterday’s session, they came up with a press release with which they informed us that they’ve no clue what’s causing the sudden volatility and said that they’re going to investigate the issue along with the company’s transfer agent. They also used the opportunity to update their shareholders on the operations side of the business saying that they have one last payment for the Cowley County leases to take care of and predicted that drilling should start by the end of the current quarter.
Once again, they fail to give us any details on the sources of financing that they’re using to fund the payments and there can still be no guarantees that they will manage to stick to their deadlines.
Even so, yesterday’s announcement is as optimistic as ever and, normally, it would cause one or two green sessions. With the current volatility in mind, however, it becomes really hard to predict what’s going to happen next which is why evaluating the risks carefully is absolutely crucial.
