China America Holdings, Inc. (OTC:CAAH) opened the market with a gap up yesterday and added even more at market close. A few days ago, the company announced to have approved a reverse split, while yesterday we detected the first paid promotion for the stock. 
CAAH crossed both the 50- and the 200-day moving averages yesterday and then closed the session at $0.0065, which is a 54.76% higher than the previous closing price. As the share price did not overcome any important resistance levels, and as the trading volume of 110,000 shares was lower than the average, yesterday’s session would be remembered solely with the first CAAH stock promotion.
Shortly after 15:00 yesterday, the promotional newsletter came in and according to our database the promoter received $12,500 as compensation for sending the alert. At that time, however, CAAH share price had already jumped to $0.007, thus the effect of that promotional effort could be put under question.
China America Holdings latest SEC filing is from last Friday. In it, the company informs its shareholders that it has approved a 400 for 1 reverse split of its issued and outstanding common stock. The company has 500,000,000 authorized shares of which 436,724,592 are currently issued and outstanding, but the rest of the authorized shares are reserved for issuance for the exercise of outstanding options and warrants.
The date on which the reverse split would become effective is not set yet, though after it is effective CAAH outstanding shares would be reduced to 1,091,811. However, 8,908,189 shares would be automatically issued under the conversion of convertible notes. Those notes were issued because CAAH did not have sufficient number of authorized share to be issued as purchase price of its operating subsidiary Ziyang Ceramics Co. at the time of the acquisition.
Thus, CAAH will have around 10 million outstanding shares after the reverse split, which could possibly open the way for appreciation of the share price.
