Entertainment Arts (OTCMKTS:EARI) Attacked by Wolves
Richard Ellis is supposedly the name of a person who likes to call himself “The Wolf of Penny Stocks”. After receiving a hefty $50 thousand, he sent out some email alerts on Friday and he introduced his subscribers and followers to Entertainment Arts (OTCMKTS:EARI). He talked about the company’s business plan, he said a few words about the chart, and he suggested that smart investors should seriously consider taking a punt.
Those who listened probably aren’t ecstatic about the way things turned out. The paid promotion did indeed bring in quite a lot of volume. In fact, more than $500 thousand worth of stock got traded in a matter of just six and a half hours which is an absolute record for EARI. Unfortunately, the hectic trading failed to boost the share price.
The ticker opened the day with a small gap up and during the first few minutes, it even tried to make a break for the $0.06 per share mark. Sadly, it failed to do it and it slipped down. Eventually, EARI closed the week 19% in the red with a price of just under $0.04. Why did that happen?
Mr. Ellis spent quite a lot of time talking about EARI‘s virtues, but he somehow failed to mention a few things. He said nothing about the company headquarters, for example, which is located in a house on what appears to be a quiet cul-de-sac in Georgia.
Mr. Wolf of Penny Stocks also said nothing about the latest financial statement. It looks like this:
- current assets: $41,687 in cash
- current liabilities: $194,700
- NO revenue
- quarterly net loss: $82,097
It should be noted that the financials above don’t include the assets and liabilities of Go Loyal – an email marketing company that was acquired in July. When EARI published the Q2 report, they said that the next statement will feature the long-awaited figures and they hinted that some more acquisitions might be announced soon.
This sounds positive enough, but the more experienced investors will tell you that putting your money in a penny stock company because of a press release (which, by the way, is more than a month old) is just as dangerous as doing it because of an email coming from a man who likes to use nicknames. This is especially true when the company in question has reported some notes that are convertible into shares at a 40% discount to the market price.
Guess what? EARI has some of those notes.
