CMG Holdings Group Inc (OTCMKTS:CMGO) As Volatile As Ever
Trusting your money with CMG Holdings Group Inc (OTCMKTS:CMGO) is not that easy. A couple of years ago, the company was doing relatively well, but despite this, the stock wasn’t particularly popular. At the beginning of the year, a few events (which we’ll discuss in a moment) occurred and they prevented CMGO from recording any sort of respectable results and investors completely turned their back on the ticker.
Last week, CMGO was brought back to life and the message boards are now full of people who seem to have forgotten their Caps Lock on, but despite this, the performance is still far from stellar. After the initial jump on July 2, the ticker crashed and although it tried to recover during Tuesday’s session, it dropped back down yesterday and lost 18%. CMGO is currently sitting at $0.0018 per share.
The reason for all the commotion is a lawsuit that the company filed against a few of its former employees alleging them of stealing some valuable assets from XA, The Experiential Agency Inc, CMGO‘s main operating subsidiary. The latest 10-Q suggests that the ex-employees’ actions caused quite a lot of damage and now, the management team, led by Mr. Glenn B. Laken, is determined to recover some of the losses. On June 30, Mr. Laken filed an amended complaint on behalf of the company and yesterday, he issued a letter to the shareholders with which he said that he is confident in the successful outcome of the legal proceedings.
Clearly, however, investors are finding it hard to believe his words, but that’s not really all that shocking considering the fact that CMGO‘s CEO himself was involved in a rather big lawsuit some years ago. In 2000, Mr. Laken, who, according to various articles on the internet, has had disciplinary problems ever since he was a futures trader in Chicago, was charged with, among other things, bribery and organizing an internet stock promotion. He was later convicted.
The interesting thing is, Mr. Laken was noble enough to admit his past brushes with the law in the 8-K form which was filed when he took over as a CEO of CMGO, but he implied in the filing that he has never met the union officials he allegedly bribed and that he has not been contracted for the internet stock promotion. By contrast, the court documents state that he pleaded guilty.
But let’s not get too carried away. After all, the people pouring money into the stock are not that interested in Mr. Laken and his past. They are focused on CMGO and its future, which, unfortunately, is full of unknowns.
It all depends on the outcome of the lawsuit. If it’s favorable, the company might just manage to get back to its former glory. If it’s not, CMGO will most likely sink into oblivion.
And while the people jumping in right now are waiting for updates from the court room, some note holders might be taking advantage of the increased volumes that the stock has recently experienced. As we mentioned in our previous article, at the end of Q1, there was more than $300 thousand worth of debt which can be turned into stock at discounts ranging from 25% to 30%. People around the message boards are quoting CMGO‘s transfer agent and are saying that the number of issued and outstanding shares is now sitting at 367 million. The company last reported an O/S count of 290 million which could suggest that some of the note holders have already converted the notes and debentures. We’re not sure if they are patient enough to wait for the outcome of the court trial.
