New China Global Inc (OTCMKTS:NCGI) With a Pump-Induced Volume Spike
Six months ago, New China Global Inc (OTCMKTS:NCGI) went under the name HelixSphere Technologies Inc. The company was traded under the symbol HLIX and their business plan involved developing technology for a novel mechanism which would power bicycles and wheel chairs.
Nobody could care less. The ticker rarely registered an active session and when it did, the volumes were negligible. The name and symbol were changed in October 2013 and the company officially became a provider of online educational services. Despite the new business model, investors remained unimpressed and NCGI drew flat lines both in the volume and in the price sections of their chart.
Last week, however, ended with some unusual activity around the ticker. On Thursday, it jumped up by around 13% while shifting more than $81 thousand worth of shares and on Friday, it broke through all the records gaining 10% and logging a dollar volume of nearly $600 thousand.
Sadly, the reason for the spike is a paid pump that started on February 6. In just three days we received more than thirty email alerts coming from a range of promotional outfits. The most prominent (and the best paid) newsletters are Investor Trendz who pocketed $130 thousand for their efforts and David Cohen who received $60 thousand.
The paying party is called Blue Seas Management who also funded January’s promotion for Hokutou Holdings International Inc (OTCMKTS:HKTU). As you can see from the chart on the right, that pump didn’t really impress and you might be wondering at this point if NCGI is in for the same fate.
One thing is for sure – there’s not much to suggest that this promotion is going to yield different results.
For one, NCGI‘s own press releases don’t sound all that convincing. On January 31, they announced the launch of their new corporate website which still boasts an “Under Construction” label in the information bar. A few days later, they said that they will provide educational and translation services to business entities, and on Friday, they informed us that they’re in some negotiations with several Chinese universities. With no deadlines set for the start of the revenue generation process and no details around the benefits from the proposed partnerships, the PR articles look like little more than wishful thinking.
Then there’s the latest financial statement which is not exactly confidence-inspiring. Here’s a summary of the figures as of September 30:
- current assets: $0
- current liabilities: $61 thousand
- revenue: $0
- quarterly net loss: $1,547
We reckon that, all things considered, the company’s position isn’t really stable enough to justify the market cap which, according to NCGI‘s profile on the OTC Markets website, currently stands at around $22.7 million.
Speaking of which, the aforementioned profile states that as of December 11, 2013, there were more than 91 million shares of NCGI common stock issued and outstanding. According to the latest filings, however, this number amounts to less than 177 thousand.
Having in mind the 2 million shares in trading volume registered on Friday, we’re more inclined to believe that OTC Markets’ website is the more reliable source of information, but whatever the case, the questions around the share structure need to be cleared as quickly as possible.
In the meantime, you should not ignore the paid pump. The continued efforts from David Cohen and his colleagues might give NCGI a few more pushes in the right direction, but eventually, there will be little to support a prolonged run. That’s why, considering the all the risks and timing every single trade carefully is absolutely essential.