Homeland Resources Ltd. (OTCMKTS:HMLA) Surges for all the Wrong Reasons
As you probably know, some pretty terrible things happened in France last Friday. The world is shocked and many people are wondering whether we’re not on the verge of a new world war. Others, however, are occupied with different thoughts. Making money, for example. Thanks to those people, the message boards and social networks are now overflowing with optimistic posts and tweets about a small OTC company called Homeland Resources Ltd. (OTCMKTS:HMLA). As we’ll establish in a minute, the things they are saying have absolutely no connection to reality, but before we get to that, let’s see if they have managed to reach their goal of making a profit on HMLA.
Chances are, some of them have. The touting resulted in a dollar volume of about $154 thousand which may not sound like much, but it’s way above what we’re used to seeing from HMLA. The stock also managed to more than double its value and reach a close of $0.006 per share.
So, a quick-trade type of strategy might have been successful for some people. Those of you who have ended up holding overnight, however, should be aware of one or two things.
Chief among which is the fact that the HMLA‘s supporters are completely and utterly wrong about one major thing. They are saying that HMLA is “a security stock” which plainly isn’t the case.
The company has been pumping oil and gas out of the ground for a while now, though it must be said that it hasn’t been particularly successful. In January the management team announced that they do indeed want to enter the security business by acquiring a stake in an enterprise called TeleSecurity Science Inc, but after failing to close the deal in a timely manner, they put the whole project on standby.
It recently became apparent that closing the acquisition of TeleSecurity isn’t the only thing they’re struggling with. They were supposed to publish the 10-K for the period ended July 31 before the end of October 2015, but having failed to do it, they said that they’ll use the extension period. Unfortunately, that didn’t work out as well which means that the most recent figures investors have to work with are now six and a half months old. They look like this:
- cash: $7,405
- current assets: $9,405
- current liabilities: $748,169
- quarterly revenues: $2,768
- quarterly net loss: $451,781
So, while some random people of the internet will tell you that if you put your money in HMLA, you will invest in a security company that is about to explode, what you will really be doing is throw it at a not-very-successful oil and gas venture that can’t keep up with its reporting obligations.
This means that over the next few days, there might be no shortage of people willing to leg it towards the exit. Certain former note holders, for example, will probably be more than happy to liquidate their positions and walk away with some pretty hefty wads of cash in their pockets.
Between September 21 and October 22, the note holders in question converted just shy of $69 thousand worth of debt into nearly 35 million shares. This, in case you haven’t calculated already, pushes the average conversion rate to less than a third of what the stock is worth at the moment.
