TMM Inc (OTCMKTS:TMMI) Announces Partnership, Stock Goes Wild
TMM Inc (OTCMKTS:TMMI) went through an unusually interesting session yesterday. It opened the day with a rather big gap up and started to climb almost immediately. At one point, it reached a 52-week high of $0.25, but unfortunately, the pressure at these levels proved to be a bit too much and the ticker crumbled. It dropped to a low of $0.15 and then recovered some of the lost ground to finish the session with a share price of $0.175 and a dollar volume of around $1.64 million.
Considering the liquidity problems that TMMI has experienced over the last couple of years, the trade value is particularly impressive. The logical question is: “What caused the sudden volume spike?“.
It was a press release and it actually hit the wire about half an hour before Tuesday’s closing bell. TMMI informed us that they have entered into a joint research program with a company called Raytheon Company (NYSE:RTN). Apparently, the two enterprises will put resources into testing and refining the TRUEDEF technology which is owned by TMMI.
The press release doesn’t tell us how much money will be put into the program, but we should note that unlike many small cap companies, TMMI actually has some capital. Here’s what the Q1 report tells us:
- cash: $1.3 million
- current assets: $1.4 million
- current liabilities: $295 thousand
- interest income: $217
- quarterly net loss: $298 thousand
So, they have the money and they have the partnership in place. If everything goes according to plan, things should be good, right? There are a few things worth considering.
TMMI is now partnering with a $29 billion company and we reckon that they might want to start thinking about their credibility a bit. The fact that their headquarters is located in a residential house isn’t really helping all that much. Then there’s the problem of the technology itself.
The notes to the financial statements tell us that the TRUEDEF codec was developed way back in the early 90′s and yet, around twenty years down the line, TMMI are still unable to monetize on it. RTN‘s involvement might accelerate things a little bit, but there are no set deadlines and penny stock investors aren’t really renowned for their patience.
Speaking of which, anyone who’s interested in putting money in TMMI should probably have a good look at the share structure. The report tells us that between April 2012 and January 2014, the company made a total of four private placements during which it sold more than 56 million investment units. Each unit consists of one share of common stock and one warrant exercisable at $0.15. There are also some options exercisable at just $0.02.
The discounts are not as ridiculous as the ones seen in the filings of other penny stocks like Tranzbyte Corp (OTCMKTS:ERBB) and Eyes on The Go Inc (OTCMKTS:AXCG), but they are still there and the people who took part in the private placements can still profit from the equity they received. TMMI hasn’t really been actively traded for more than two years which leads us to believe that they are still holding onto their shares and warrants.
Doing your own due diligence and weighing the risks carefully before putting your hard earned cash on the line is, we reckon, as important as ever.
