Embarr Downs Inc (OTCMKTS:EMBR) Running On Reverse Merger Speculation

Have you noticed the spike in the share price of Embarr Downs Inc (OTCMKTS:EMBR)?

It increased from $0.0004 hitting the one-year highs of $0.0013 in a very short period. The stock returns are extraordinary, but this is not the most significant. More than 200 million shares changed hands, which, in our opinion, shows that the company has drawn the attention of many people in the market.

Before we explain what interested the market participants, check the following stock chart:

1-month chart for EMBR

Change in the direction of EMBR with new merger

Company Logo - Embarr Downs Inc OTCMKTS:EMBR

Embarr Downs Inc. (OTCMKTS:EMBR) in an old entity; created in 1997 and headquartered in San Clemente, California. The market seems to be interested because of a recent merger agreement signed with Pest Pilot, Inc.What will be the new activity?Pest Pilot, Inc., located in Indiana, is focused on pest control services and was said to be looking for ways to use Drones to spray crop fields. Thus, we will be expecting EMBR to do the same.Why is the market so excited?A merger with Pest Pilot puts EMBR in a fast-growing industry. Market participants seem to be expecting that the company will also increase its assets and liabilities so that its credit profile could be enhanced. If this happens, we should expect the enterprise value to grow; as a result, the share price should also increase.When will we be getting the financial statements?That's the biggest question that everybody in the market seems to be trying to respond. Last year, EMBR said that the deal was almost finalized, and it would begin the audit process for filing a Form 10 with the SEC, but the documents have not been received.The new information on the transactionOn January 16, 2018, we received a press release, wherein we could read that the shareholders will be informed about the new details. These were the most meaningful words:"Embarr Downs, Inc. will keep both its shareholders and public completely informed of the entire process as the details continue to develop. The Company’s main goals for 2018 is to finalize acquisitions and reverse merger." SourceWe believe that many thought that the company was finishing the paperwork and the merger would close soon. As a result, the share price increased.What's our take?We believe that readers need to act with extreme caution here. The stock returns are large, and we understand the market interest. However, the company has a lot of work to do. The financial statements have not been released for a long time, which makes the company a risky bet.Financial StatementsThe last fiscal situation reported showed that the net asset per share is positive. EMBR has $0.02 million in cash, $0.8 million in total assets, and $0.76 million in total liabilities. These financial figures showed that the company's financial situation is stable.Additionally, the revenue reported for the last quarter was equal to $0.1 million, which we appreciate as revenues were zero in the previous annual report. The income reported was negative; $1.8 million.Even if the market appreciated these financial figures, we need to remark that they are as of August 31, 2014. In our opinion, after the merger, many of these numbers will change.

It seems to be a low float runnerThose wondering about the share price volatility should read this carefully. The total amount of shares outstanding is equal to 300,000,000 shares. The float, which is the number of shares owned by the public, is equal to 5,000,000, which is a very low number. As a result, we expect the order book to be quite close, so market orders can create a lot of share price volatility.ConclusionCurrently trading with a market cap of $0.1 million, EMBR is an interesting story among small caps. In our opinion, the business growth could increase quite a bit in 2018 with the new initiatives and more share price increases could be expected. Hence, the company is an interesting microcap to be followed closely.We will be updating our subscribers as soon as we know more. For the latest updates on EMBR, sign up below!Disclosure: We have no position in EMBR and have not been compensated for this article.Image courtesy of Amtec Staffing via Flickr