New Media Insight Group Inc (OTCMKTS:NMED) Crashes Hard

Like many other OTC companies, New Media Insight Group Inc (OTCMKTS:NMED) like to begin their press releases by saying that they are a leader in their industry. NMED works in the mobile payment solutions business which is undoubtedly a hot sector at the moment, but we’re more interested in the “leader” part of the claim. Let’s put it to the test.

Red lights start flashing almost immediately. Normally, leading companies tend to have presentable offices in big business buildings in the center of equally big cities. NMED, however, prefer to work out of what appears to be a residential house in Cave Creek, Arizona.

There are some questions around the management team as well. Leading companies are often led by people who have extensive experience and huge achievements in various businesses. NMED, on the other hand, is headed by Michael Palenthorpe who was once at the helm of a company called Celldonate, Inc (now known as Gold Torrent Inc. (OTCMKTS:GTOR)). He resigned from his position at Celldonate on September 30, 2013 and he left the company with no cash and revenues, about $2 thousand in total assets, $430 thousand in liabilities, and an accumulated deficit of nearly $490 thousand.

And while we’re on the subject of financials, we might as well mention that Mr. Palenthorpe’s current company is not exactly flourishing. Here’s a summary of the most important figures as of July 31:

  • current assets: $130 thousand in cash
  • current liabilities: $7 thousand
  • NO quarterly revenues
  • quarterly net loss: $94 thousand

So, NMED doesn’t really fit the widely accepted definition of a “leader”. The company is still in the development stage and it’s safe to say that it’s not doing too brilliantly. The only thing we can do at the moment is wish them the best of luck and take a look at the stock. That’s where some interesting questions start to pop up.

Why did NMED run from $0.73 per share all the way to $1.34 in a matter of just two weeks? And why did it wipe out nearly 18% of its value during yesterday’s session?

It all has to do with a paid pump. Andy Carpenter from Wall Street Revelator set up a landing page a couple of months ago, and after that didn’t work, he started sending out some paper mailer brochures. StockPalooza also contributed to the hype with an email alert from last week.

Once you take a closer look at the fine print under the promotional materials you’ll see that, not surprisingly, the pumpers are writing positive things about the company because somebody has paid them to do it.

The question now is, who is that someone and why do they want to inflate NMED‘s share price?

Let’s get back to the disclaimer. After he finished with his ludicrous price targets and promises of wealth and fortune, Andy Carpenter decided that it’s his duty to write a thing or two about the paying party. It’s apparently called CTSV Investments and it owns 550,000 shares as well as 1 million warrants exercisable at $1. The disclaimer says that it “may” sell its holdings on the open market during the pump.

Other people might decide to take advantage of the hype as well. As we mentioned in our previous articles, Page 11 of the latest 10-Q tells us that a couple of years ago, some unnamed investors bought a total of 12,218,750 shares (as adjusted for the two stock splits) for a total of $57,500. Theoretically speaking, if the aforementioned unnamed investors still own the shares and if they unleash them on the open market, they could bag around $13.4 million.

Not a bad deal, you would agree.

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