IDGlobal Corp (OTCMKTS:IDGC) Can’t Run Without Press Releases
Around 3PM on Monday, IDGlobal Corp (OTCMKTS:IDGC) announced that they have signed a Memorandum of Understanding with a company called Corr Brands Inc. The market didn’t have the physical time to react to the news and the session finished without a significant jump. On the next day, however, IDGC logged a dollar volume of around $150 thousand while the price jumped by a whopping 150%.
About an hour after Wednesday’s opening bell, the company issued another press release. It said that IDGC and Corr Brands have signed a distribution agreement which means that the former now has the license to market a line of products called Green Rush TM. As you might have guessed already, the aforementioned line of products is based on cannabis which further fueled investors’ enthusiasm. In a matter of just six and a half hours, they traded more than 665 million shares while the ticker gained another 80%.
Yesterday was the first day of the week without any news coming out of the company headquarters and if the performance is anything to go by, IDGC simply can’t run without the help of press releases. In a matter of a single session, the ticker racked up a dollar volume of around $427 thousand and lost 22% of its value. Currently, it stands at $0.0007 per share.
How do investors feel about this?
We can’t be certain, but we’re pretty sure that the former note holders don’t mind yesterday’s drop all that much. Between May 2013 and May 2014, IDGC issued a mind-boggling 1.5 billion shares of common stock as a conversion of debt and, as you probably know already, all of them were valued at $0.0001 a piece. This means that even after yesterday’s slide, the people who got the aforementioned shares stand to make 600% in profits, which, you would agree, is not bad at all.
But what about the regular investors who jumped in because of the optimistic press releases?
Apparently, there are still some believers. The company is about to enter the marijuana industry which is really hot at the moment and IDGC‘s affordability acts as an additional incentive.
The thing is, IDGC want to make a name for themselves in a fiercely competitive sector and they rely on the following financials to do it:
- cash: $20 thousand
- current assets: $286 thousand
- current liabilities: $4.3 million
- NO revenue since inception
- quarterly net loss: $2.7 million
With these sort of figures, IDGC will need to pull off quite a few miracles if they are to make an impression on the pot industry. Even if they do, you still need to worry about one more thing.
We already mentioned that a lot of notes were converted into common stock over the last twelve months. That, however, doesn’t mean that all the debt has been paid off. There was still around $235 thousand worth of convertible notes on March 31 and as you might have calculated already, they could potentially be turned into 2.3 billion shares of common stock.
Bearing this in mind is, we reckon, extremely important.