Salamon Group, Inc. (PINK:SLMU) broke out during Friday’s trading session, carrying a significant volume and apparently strong conviction for carry on into this week as well after the company signed a stock purchase agreement (SPA) with Sunlogics.Technically, the price has broken out through all the significant resistance levels for the past three years. It resembles a blue skies breakout, which is usually a good idea to buy into. The lack of any key levels is, however, posing additional risk because SLMU trades below one dollar and had major liquidity issues in the past.
The price breakout was caused by the company’s contract to acquire Sunlogics Power Fund Management Inc.. The reverse merger could justify the ample buying and price increase even despite SLMU’s troubled financial situation. However, any details on the acquisition contract were spared. There was also no 8-k form filed to confirm that the stock purchase agreement took place.[BANNER]
The sources of information about Sunlogics are currently limited to the company’s own website. Any financial details are unknown. The business appears to have alliances with some big companies, including General Motors and Energizer, but the extent of their cooperation remains clouded.
Traders should be aware that SLMU price rally could see major corrections if no additional information on the would-be merger comes out soon. Current market cap of over $4 million assumes the business is undergoing significant changes, but would be way over the top if the merger would not fall through. Salamon had 14 dollars in assets versus $107 thousand in liabilities for the three months ended September 30, 2010.
