Primco Management Inc (OTCBB:PMCM) Skyrockets on Marijuana News
We won’t be exaggerating if we say that Primco Management Inc (OTCBB:PMCM) was one of the worst pump disasters of last year. The promotional coverage started on February 7, 2013 and throughout the next three weeks, it was virtually constant. The newsletters left the ticker alone on February 25, but by then it had already become apparent that the results are absolutely devastating.
The start of the pump coincided with the start of active trading for PMCM and back then, the stock was hovering around $0.19 per share. Just twenty days later it was already below the $0.04 mark.
Once left to its own devices, the ticker continued its slide. Despite a few peaks here and there triggered by optimistic press releases or mentions from the promoters, PMCM was battered to the ground and there is a very good reason for this – the catastrophic dilution.
If you check out the company’s SEC filings, you’ll see that in a matter of just two months, the management team made a couple amendments to the articles of incorporation and raised the number of authorized shares from 500 million all the way to 5 billion. The newly authorized stock was put to use as well. The report covering the first quarter of 2013 came out on May 20 and it said that there were 194 million PMCM shares issued and outstanding. By November 18 (the publishing date of the Q3 report) this number had grown to over 1 billion. Looking at the latest SEC filings, we can see that the management team are issuing more convertible notes which means that the possibility of new stock seeing the light of day is quite real.
In the interest of fairness, we should also note that PMCM managed to get some sort of business going in 2013. They solidified the balance sheet and generated some revenues, but the management team admits that the rate of progress is slower than expected. Here’s a summary of the figures as of September 30:
- cash: $115 thousand
- current assets: $3.1 million
- current liabilities: $3.5 million
- quarterly revenues: $29 thousand
- quarterly net loss: $1.6 million
Indeed, we’ve seen worse 10-Q’s, but the $1.6 million net loss is hardly confidence-inspiring, especially in light of the horrific dilution.
Despite this, the ticker seems to be moving again. Yesterday, PMCM surged by no less than 142% and closed the session above the $0.001 per share mark for the first time since November. More than 3 billion shares changed hands resulting in a dollar volume of around $4.6 million. What could be causing such a sudden and violent run?
If you’ve been following the stock market lately, you know that numerous OTC tickers made similar jumps over the last couple of weeks. They did it when they announced their entrance into the white hot marijuana industry. Sure enough, when you check out the company’s latest press releases, you’ll see that a few minutes before the start of yesterday’s session, PMCM stated that they’re jumping on the bandwagon as well.
Apparently, they want to acquire properties which will be leased to manufacturers and retailers of medical marijuana. As is often the case, the press release is a bit sparse on details, but it’s clear that the mention of the cannabis industry was enough to set the market on fire.
Unfortunately, like the rest of the newly born pot stocks, PMCM is fueled by little more than hype and excitement. If the all-too-familiar drop is to be avoided, the management team will need to come up with some results from the operations very soon. And even if they do manage to get the cannabis business up to speed, they’ll need to put an end to the devastating dilution that has been plaguing PMCM‘s share structure for so long.
That’s why, doing a lot of due diligence and carefully considering the risks is absolutely essential.
