Primco Management Inc (OTCBB:PMCM) Sinks Closer to the Triple Zeros

42PMCM.pngAt the beginning of the year, Primco Management Inc (OTCBB:PMCM) was firmly glued to the bottom of the chart and it looked like there was nothing that could get it out of the $0.0001 – $0.0003 range. Then, in February, the company decided to jump on the marijuana bandwagon and, somewhat predictably, this sent the ticker flying high.

In just over two months, PMCM managed to break through the $0.001 barrier and at one point, it ran past $0.005. Unfortunately, these levels proved too high for the ticker and, as you can see from the chart, it’s been on a decline over the last few weeks. Yesterday, PMCM slipped by another 23% and closed the day at $0.0016 per share which is getting precariously close to the all too familiar triple zero territory.

People who timed their trades well probably managed to walk away with some healthy profits after the initial run. Unfortunately, we can see from the message boards that there are also some who got a bit carried away with the cannabis excitement and are now understandably disappointed with the stock performance.

At the same time, the management team is trying hard to draw traders back to the stock and is making numerous announcements about events that will allow PMCM to move on with its business plan. Investors, however, are having none of it. We can see why.

PMCM‘s press releases (even the ones before the marijuana brouhaha) have always been optimistic. The announcements often suggest that the company’s future is bright, yet once the financial reports come out, people see that this isn’t quite the case.

A point proven by the figures in the latest 10-Q:

  • cash: $122 thousand
  • current assets: $254 thousand
  • current liabilities: $2.2 million
  • quarterly revenues: $12 thousand
  • quarterly net loss: $422 thousand

As hard as it is to believe, the shaky balance sheet isn’t PMCM‘s biggest problem. This title is reserved for the absolutely devastating dilution that the shareholders have had to endure over the last couple of years. How bad was it?

In October 2012, the company effectuated a 20 for 1 forward split and as a result, the O/S count grew from around 2.9 million to 184 million. Right now, less than two years later, it’s standing at well over 4.9 billion.

In February, PMCM announced that they want to increase the number of authorized shares from 5 billion to 25 billion and although there’s been no official confirmation of this action, the fact that stockholders who own 60% of the voting rights approved it means that they can do it at any time.

2PMCM_logo.pngIn the interest of fairness, we should also note that the management team is making some steps towards reducing the stock issuance. Several press releases have hit the wire which inform us about negotiations between PMCM and its creditors. Apparently, they are trying to repay some of the convertible notes with cash and settle others with a one-time issuance of a fixed number of shares.

If they succeed in cutting down on the heavy dilution, this will definitely be good for the tormented shareholders. But will it be too little, too late? We’ll leave it up to you to decide.

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