PennyPlayoftheDay See the Light with Light Media Holdings Inc (PINK:LGMH)

It is no secret that entertainment is a huge business nowadays. Music, movies, games – all these industries are worth billions and all of them use Internet as one of their main ways to advertise and sell the products. Light Media Holdings Inc (PINK:LGMH) are aware of this, but they have taken on a more spiritual approach.

LGMH‘s websites are among the thousands of online platforms that sell music over the Internet. The music that they are marketing comes from all different genres, but the theme is the same – Christianity. When we say “different genres”, we mean it. They even have a section called Holy Hip Hop. This is a peculiar mixture, but the most important question for us is: “Do people like it?”.

Surprisingly, it seems that they do, which is not something you see every day out of a penny stock company. LGMH are also quite regular with their filings which, as we all know, is a good thing. The latest report that they have published covers the period that ended on December 31, 2012 and it contains the following figures:

• cash: $2,552
• current assets: $33 thousand
• current liabilities: $15 thousand
• revenue (Q4 of 2012): $14 thousand
• net income (Q4 of 2012): $2,534

We rarely see a small cap company with a positive financial statement, but LGMH are not out of the woods just yet. As you can see, the profit, while there is some, is rather small and it’s only due to the fact that they sold some assets during the last quarter. Their bank account balance is also miniscule.

All in all, they are on the right track, but they still have a long road ahead of them. And they should have in mind that they can trip at any time. Which brings us to a press-release that they published at the beginning of December. It states that they have initiated a stock repurchase program and, according to the latest report, they have bought back 11,000 of their shares in December alone. This, of course, will raise the value of long-term investments and will certainly make people who trusted them happy. Still, we can’t help thinking that this was not the best moment for such a program. The profits are small and the margin for error is really thin, so we believe that it would have been a better decision if they waited for a more steady and substantial stream of money before they initiate it.

The thing that worries us the most, however, is the fact that they are featured in a promotion. A lot of people could be drawn by the good-looking statement and the fact that, unlike a other penny stocks, LGMH‘s operations are already on the way. Of course, there’s nothing wrong about that but people who own a lot of shares might take advantage of the interest and sell stock at a profit, which means that the risks are still quite high. The last time LGMH were featured in a paid pump, they lost more than a quarter of their price in just one trading session. On the whole, the previous promotion didn’t stop the downward trend either, so it still pays to weigh the options carefully.

Speaking of pumps, PennyPlayoftheDay are not new to this sort of practices, either. They have promoted a number of companies in the past and, after the hype is gone, they have all struggled. The last pump that they took part in was the one for Vitamin Blue Inc (OTC:VTMB) on February 14 and you can see that it made little effect on the stock performance leaving it to fall down into the sub-penny field.