CMGR dropped 50% down and closed the session at $0.038. Just like on Friday, almost half of yesterday’s nearly 14 million share volume was made up by shorters, who still find further rising potential and enough of buyers on the company’s recent press releases and on the large number of alerts for CMGR sent out to investors by various stock promoting website since last Wednesday.
Then, “The Big Deal” with ABC Family for Camelot’s animated classic PUFF THE MAGIC DRAGON was announced. According to the press release, ABC has bought the domestic rights of the program and it will be on air around Christmas. Following the news, the “fable” for CMGR stock began as well and the share price made a four-digit rush up over a day.
CMGR filed its latest financial report about ten day ago,which revealed that the financial condition was not flourishing at all. The company is heavily indebted and although it reported first revenues for the first half of this year and acquired the film and television library of another company in April, the chances for profitability are almost inconceivable. For the six-month period ended this June the working capital deficit of $6 million was remarkable as certain notes are due in short and CMGR had over five times more total liabilities than the same period last year.
The stock bears high dilution risks as well, as most of that notes are convertible. In addition, the outstanding shares of preferred stock are convertible into a total of 356 million new common shares, making the purpose of the recent 1-for-20,000 reverse stock split evident. In connection with the above mentioned acquisition, another series of convertible preferred stock will be issued and each one will be convertible in 50 new common shares.[BANNER]
