Standard Metals Processing Inc (OTCMKTS:SMPR) on a Mysterious Run
Standard Metals Processing Inc (OTCMKTS:SMPR)’s management team decided to change the company name back in December and it would appear that investors are quite happy about this move.
The stock started climbing the charts and less than a month after receiving the new ticker, it was already above the $1 per share mark. Some hesitation followed, but the start of the new year brought another surge and in February, SMPR smashed through the $2 barrier with ease.
The performance over the last couple of weeks hasn’t been perfect, but the 11% jump from yesterday and the dollar volume, which at the end of the day stood at nearly $460 thousand, suggest that more people are now paying attention.
The thing is, SMPR‘s run seems to be shrouded in mystery. Indeed, the company issued several optimistic press releases, but, apart from a memorandum of understanding which was announced in January, there aren’t any deals that could have an immediate effect on the stock performance. What’s more, the MOU, SMPR say, should bring in substantial revenues, but they don’t give us any deadlines for the actual signing of the contract.
One thing is for sure – they need to hurry up. The latest 10-K shows that on December 31, 2013, SMPR had some serious financial problems. Here are the figures:
- cash: $143 thousand
- current assets: $148 thousand
- current liabilities: $2.9 million
- no revenue since inception
- 2013 net loss: $7.7 million
It’s pretty clear that the financials above are not exactly confidence inspiring, but despite this, some people are still willing to trust the company and its business plan. A Schedule-13 published in February, for example, tells us that an entity called Ashford Capital Management owns around 9% of SMPR‘s issued and outstanding shares.
Ashford is, apparently, a well-recognized investment advisory firm which has more than $650 million in assets and some people (like the author of this Seeking Alpha article) reckon that if the big boys are ready to jump in, there really should be something to the company.
It’s up to you to decide whether that’s the case, but you should probably bear in mind that Ashford don’t always get it right. Back in 2009, for example, they invested quite a lot of cash into a NASDAQ-listed company called Ambassadors International, Inc. (OTCMKTS:AMIEQ). Two years later, AMIEQ was forced to seek bankruptcy protection due to heavy losses.
There’s one more thing worth considering. If you take a closer look at SMPR‘s latest financial report, you’ll see that there’s no shortage of people who can make some healthy profits from the current price levels. There are convertible notes that can be turned into common stock at rates ranging from $0.25 to $0.50 and there are also some warrants exercisable at well under $1 per share.
As you can see, the involvement of big players like Ashford Capital can certainly cause a lot of stir among traders. Even so, a potential investment carries its risks and considering them carefully is absolutely essential.
