Nate’s Foods Co (OTCMKTS:NHMD) Spikes Despite a Terrible 10-Q
It all started back in May. The old and practically dormant OTC company that we then knew as Capital Resource Alliance Inc (CRRA) suddenly woke up and announced that it’s about to enter a reverse merger agreement with an entity that is developing pancake batter stored in pressurized cans. Everyone was extremely excited about the new business plan and they thought that the company will start making millions of dollars in no time. In September, the name was changed and CRRA officially became known as Nate’s Foods Co (OTCMKTS:NHMD).
A couple of hours before yesterday’s closing bell, NHMD published the 10-Q covering the period ended August 31. We’ll just let the figures do the talking:
- total assets: $2,083
- total liabilities: $76,520
- NO revenue
- quarterly net loss: $71,087
Without a shadow of a doubt, the results are in stark contrast with the enthusiasm and excitement we witnessed back in May when the merger was first announced. But are investors worried about NHMD‘s catastrophic financial situation?
Not at all, it seems. In fact, yesterday, the ticker peaked once again. It hit a 52-week high of more than $0.12 and it finished the day at $0.11 which is a healthy 32% above last week’s close. When you take a look at the historical performance you’ll see that NHMD hasn’t registered a red session since November 3 and you’ll notice that over the last five trading days, it has managed to add a total of 197% to its market cap. The logical question is: “Why?”.
You don’t need to be an experienced financial analyst to spot the two main problems in NHMD‘s 10-Q: the lack of revenues and the catastrophic shortage of cash. If the press releases are anything to go by, both issues have been sorted out.
First, on November 4, NHMD announced that they will be officially launching their pancakes in a can during an event on Saturday. They also said that you will be able to order them through the company website on November 17. If you’re not a fan of internet shopping, fear not. On November 5, NHMD issued a second press release, this time telling us that the canned pancakes will be available in brick-and-mortar shops during the first calendar quarter of 2015.
As for the lack of cash, the company announced yesterday that they have signed a $3 million financing agreement. The press release is a bit sparse on details, but the management team were quick to point out that the cash injection won’t result in any dilution for the shareholders and that it will help them roll out some new products during 2015.
All in all, the announcements suggest that most of the major obstacles have been overcome and, judging by the intense buying volume, investors reckon that there’s nothing but bright future ahead. But is this really the case?
Of course, it’s up to you to decide. Before making up your mind, however, you might want to read through the Common Stock section (Note 4) of the 10-Q covering the third calendar quarter of 2010. We reckon that there’s some valuable information in there.
