CHOP: Steel Company’s Shares Ready For The Chopping Block
by Sonya Colberg, Senior Editor, 4/24/2015 9:51:35 AM
The future of a Chinese steel company teeters atop a pile of porcelain artwork.
Those fragile pieces are the latest elements straining to prop up China Gerui Advanced Materials Group (CHOP).
The company says it intends to eventually sell porcelain pieces in hopes of saving the steel business.
But the hammers are raised and threaten to shatter CHOP’s last-ditch efforts.
TheStreetSweeper highlights the cash burn, business shift, lawsuit allegations, and other issues that we believe make CHOP shares worth a couple of quarters or maybe even, as one analyst said, “zero.”
Meanwhile, investors may find other viewpoints here about the Chinese cold-rolled steel manufacturer. The company’s thin steel product – sometimes only as wide as a human hair – is sold to the Chinese food packaging, electrical appliances and construction materials industries.
CHOP has not yet responded to TheStreetSweeper’s request for an interview.
*Virtually no cash left
CHOP has been burning through a mountain of cash – about $240 million in three quarters or $80 million per quarter - the company now reports just $2.3 million of unrestricted cash and $50 million in restricted cash remaining. At the current unbelievable burn rate, CHOP must find more operating money soon.
*History of massive revenue decline, debt problems and recent cash-poor position
CHOP shares suddenly rocketed from 70 cents apiece to about $4, in opposition to the direction of the company’s cash and revenue.
The company’s revenue has been spiraling downward for some time, as shown in the company’s Securities and Exchange Commission filings:
Filed Jan. 6, 2015:
Third Quarter 2014 Results Revenue decreased 90.0% to $3.1 million in the third quarter of 2014 from $30.9 million in the third quarter of 2013. Nine Months 2014 Results Revenue was $62.2 million in the first nine months of 2014 compared with $119.6 million in the first nine months of 2013…As of June 30, 2014, the Company had $3.0 million in unrestricted cash…
The company also posted a loss of $6 million in the third quarter. Noting its one-for-ten reverse stock split, the company blamed poor results on low steel prices, declining sales, credit problems, downtime of production lines, bank loan defaults and working capital shortages.
Filed Sept. 4, 2014:
Second Quarter Results Revenue decreased 24.1% to $32.7 million in the second quarter of 2014 from $43.1 million in the second quarter of 2013. Gross profit decreased 51.8% to $1.7 million in the second quarter of 2014 from $3.5 million in the same quarter of 2013.
Gross margin was 5.2% … Operating loss was $0.6 million…Net loss was $1.4 million.
Filed May 20, 2014:
First Quarter Results Revenue decreased 42.0% to $26.4 million in the first quarter of 2014 from $45.6 million in the first quarter of 2013. Gross profit decreased 123.9% to ($1.2 million) in the first quarter of 2014 from $5.2 million in the same quarter of 2013.
The chart from Bloomberg below, presents a vivid image of CHOP’s perilous cash position, plummeting from about $200 million or more in the second quarter of 2012 through the first quarter last year, down to a few million in the second and third quarters of 2014:
Inuvo: Top Reasons This Stock Should Dive
by Sonya Colberg, Senior Editor, 4/16/2015 10:00:35 AM
Arkansas-based Inuvo (INUV) is working in a business that elicits the same level of enthusiasm as, say, receiving a dinnertime call from a telemarketer or getting a visit from a solicitor peddling a coat-full of fake Rolex watches.
INUV and its peers have seen some doors slammed on their businesses previously. And this Internet marketing and technology company could see many more slammed doors in the near future.
Let’s look at INUV’s background and then get right to the top reasons TheStreetSweeper is watching for a decline in INUV’s stock – likely below the $2 level.
Investors should also take a look at other viewpoints on INUV here.
Recent hype that Google and Yahoo have renewed deals with INUV are actually quite routine. Virtually all companies in this space have a relationship with the two Internet search providers, though these relationships seem to change rather often.
A big change occurred a few years ago in the toolbar business that was making millions for INUV and others. The Internet version of the solicitor banging on the door at dinnertime, these toolbars automatically installed when you downloaded a video. A search in the toolbar would be an INUV search, powered by Yahoo or Google. And the revenues from ad clicks were shared by the toolbar vendor and the search company.
But Google made a small change that drastically dropped toolbar downloads. Bye-bye searches with random Kim Kardashian rear-end pix popping up. Bye-bye key market opportunity for INUV and peers.
So INUV transitioned out of toolbar downloads. The company now focuses on the digital publishing business and building ads for other web publishers.
CEO Richard Howe told TheStreetSweeper that INUV works at keeping fresh, interesting content in its properties focusing on health, finance, careers, travel and local interests.
“On the ad tech side, the key there is really to build new and better ad units,” he said. “These would be ads that you see on the website when you go visit the website. You may think they’re ads that just sit there and don’t do anything, but the ones that perform the best have some sort of intelligence behind them.”
A long-time analyst in this space scoffed, “At the end of the day, these are banner ads.”
It’s such a fast-moving space that it even sometimes gets ahead of INUV. In one slightly awkward moment during the interview, we wondered about the “TastyNewDishes.com” that INUV promoted in its February corporate presentation, on page 8, here. We couldn’t find it in our Internet search.
“Sometimes publishers leave, right? So we may … need to revise the presentation,” said Mr. Howe, noting someone else mentioned the same thing this week. “I’ve got to go look into why.”
*Stock offering? CEO says, “It’s certainly something that our board is now talking about.”
Mr. Howe told TheStreetSweeper that a stock offering has not been “something we have contemplated up until now.”
He said the board hadn’t considered a raise before because they didn’t want to cause dilution since it wasn’t necessary.
“It’s not like we need the money,” he added.
“Now that the stock price is rising, while we haven’t decided to do an equity raise, it’s certainly something that our board is now talking about,” said Mr. Howe.
He wouldn’t elaborate, of course, on exactly how soon a stock offering might happen.
“Whether that means we’ll do it or not, is a whole other story. And, like I said, we’re certainly not in any hurry to do it,” added Mr. Howe.
*Striking decline in INUV’s website traffic.
The number of unique visitors, so vital to growth for companies like INUV, has shown a stunning decline of about 50 percent for INUV over a year. See the chart below, measuring the traffic to INUV’s http://health.alot.com/website, according to the “Nielsen of website traffic,” Compete.com:
JAMN Finally Spills the Beans -- And It's an Ugly Mess
by Janice Shell, 6/2/2011 10:32:51 AM
To be sure, the 10-K offered investors little reason to sing. For starters, the filing reveals, this once-hot “coffee company” sells no coffee of its own at all. JAMN relies on a supplier based in frigid Canada – far away from the tropical Jamaican home of its co-founder Rohan Marley – to provide the company with an actual product to sell to its customers instead.
Back in April of 2010, JAMN inked a “supply and toll agreement” with Canterbury Coffee of British Columbia that gave it access to some brew. According to that agreement, JAMN relies on Canterbury to fulfill every role – save a minor one – normally satisfied by a firm that classifies itself as a coffee company. Canterbury purchases the coffee beans. It roasts them. And it then packages them in bags supplied by JAMN – the company’s only real product – for sale to the public.
JAMN signed this deal more than a year ago, right before Shane Whittle – a notorious Vancouver stock promoter – officially resigned as CEO of the company. But the company never mentioned that agreement, seemingly material enough to warrant at least a quiet 8-K report, in a single regulatory filing until now.
Jammin Java (JAMN): Hot Stock ... Bitter Aftertaste?
by Janice Shell, 6/2/2011 10:30:25 AM
It’s time to wake up and smell the coffee! That’s exactly what Jammin Java (OTC: JAMN.OB), a heavily promotedcoffee company, and – for very different reasons – TheStreetSweeper would like investors to do.
Since the beginning of the year, JAMN has miraculously risen from the ashes of the “Grey Market” graveyard to become one of the liveliest – and richest – stocks in the entire microcap arena. JAMN has seen its stock shoot straight toward heaven, soaring from 55 cents to peak above $6 a share on massive daily volume, with its market value nowtopping $355 million despite the company’s limited resources and operating history. (As covered in more detail below, two of the Internet tout sheets pushing JAMN the hardest effectively vanished -- disabled by their Internet servers -- on the day the stock’s trading volume exploded past 20 million shares.)
CCME: Few Signs of Life at 'Healthy' Chinese Firm
by Roddy Boyd, 3/23/2011 9:30:34 AM
Also, and this cannot be understated, hanging out on a sidewalk in Fujian–the sidewalks double as parking spots when the streets, which appeared to have been designed in the Han Dynasty, fill up–was not a viable option. There was also the matter of the world-class headache the Financial Investigator was developing from Fuzhou’s diabolical smell, an epic conflation of poor sewage treatment, air pollution and the smell of cabbage that made getting the hell off Dongjie street a matter of vital importance.
The Financial Investigator and his traveling companion for the trip, an American investor with extensive experience in China, decided to head upstairs despite our interview with the CFO having been cancelled at the last minute (with no explanation given.) We thought a quick tour of the offices and meeting a few other executives might open our eyes to a few things.
Though the language barrier was a little steep with the young receptionist–when we asked for writing paper, she provided Kleenex–we were in short order shown to their conference room and told to wait. It did not escape notice that pride of place in the conference room belonged to a framed certificate of participation from the Fall 2010 Rodman & Renshaw conference, the World Cup for reverse merger companies and the pumpers and touts who peddle them.
Eventually chief operating officer James Yu came down and after spending 30 minutes trying to understand who we were, concluded that giving us a tour wouldn’t hurt. Soon enough, his colleague, Vinne Ye–the chairman’s assistant–came out and took us around.
It was most eye-opening.more...
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