Today we are releasing another piece about eMedia Group Inc (OTCMKTS:EMMD), which was recently covered by my colleague Alex Carlson in this article. As noted, the stock returns of this company have been outstanding. As of April 3rd, the share price was $3.60 and it was about $0.5 not long time ago. Take a look at the chart:
In this article, you will read about our recent investigations regarding this company. We tried to understand why investors are exchanging the shares at these prices, and in order to assess it, we will review the recent communications as well as balance sheet, revenues and shares outstanding of eMedia Group Inc.
Change in the amount of total outstanding shares
The share price jumped from $0.5 in February 2017 and continued the uptrend in March. So, the investors should have appreciated very much the information delivered in this time period. We could identify very relevant information that we could not find anywhere else, but here. In this document, you can find a press release that notes the share exchange agreement between HJ Invest Holdings ApS and HP Invest Holdings ApS and eMedia Group Inc. This is the most remarkable information:
"HJ and HP each own 30,000,000 of the issued and outstanding shares of EMMD and are also owned by EMMD’s executive officers and directors, Mr. Henrik Jorgensen and Mr. Christian Pedersen, respectively. EMMD owns 100% of the issued and outstanding shares of eTarg Media ApS, a Danish corporation (“eTarg”), its wholly-owned subsidiary. Pursuant to the Share Exchange Agreement, HJ and HP acquired all of the issuance and outstanding shares of capital stock of eTarg from the Company in exchange for cancellation of 60,000,000 restricted shares of EMMD’s common stock from HJ and HP. Prior to completion of the transactions contemplated by the Share Exchange Agreement, EMMD’s Vice President of Business, Mr. Kok Wong Liew, was elected to EMMD’s Board of Directors." Source
"The Share Exchange Agreement was approved by one hundred percent (100%) of EMMD’s shareholders on January 2, 2017. The closing of the Share Exchange Agreement occurred on February 1, 2017. Following completion of the Share Exchange, Mr. Jorgensen and Mr. Pedersen resigned as officers and directors of EMMD. A description of the specific terms and conditions of the Share Exchange Agreement is set forth in the Share Exchange Agreement filed herewith as Exhibit 2.01." Source
According to this information, the company entered into a share purchase agreement with two Danish firms that acquired eTarg from the Company in exchange of cancellation of 60,000,000 restricted shares of EMMD’s common stock. When we first saw the document, we could not really understand it properly. We thought that if the company was canceling shares, the total amount of outstanding shares should be reduced. Therefore, each share should be more valuable. In the same document, we could read the following:
"Prior to completion of the Share Exchange Agreement discussed above in Item 1.01, Messrs. Jorgensen and Pedersen were deemed the control persons of EMMD since they each beneficially owned 37.5% of EMMD’s total issued and outstanding shares of common stock. As a result of such transaction, their shares of EMMD have been cancelled and returned to treasury reducing the total number of shares issued and outstanding to 20 million shares." Source
So, we were right; the total outstanding shares went from 80 million to 20 million. That is the main reason behind the recent explosion in the share price. Since the amount of shares was reduced 4 times, the shares should be valued now 4 times more. Therefore, since the share price was about $0.5, it makes sense that the share price is valued about $2 now.
Something else should have occurred
However, we can explain why the value went to $2, but we cannot explain why the share price continued the uptrend until $3.6 in March. So, the team looked for more communications.
We found another press release delivered on March 6, 2017 that noted a new Line of Credit Agreement with a Malaysian debt holder:
"On March 6, 2017, eMedia Group Inc., a Nevada corporation (the “Company” or “EMMD”), entered into a Line of Credit Agreement (the “Agreement”) with Mr. Lim Boh Leong and Ms. Tan Hooi Koon, each a resident of Malaysia, whereby Mr. Lim and Ms. Tan agreed to provide the Company with a line of credit of up to USD $500,000.00. Mr. Lim and Ms. Tan are each shareholders of the Company and agreed to provide a line of credit after being approached by the Company’s Chief Executive Officer, Mr. Kok Wong Liew." Source
Some investors might have appreciated this new line of credit. The fact that the company may be able to finance its operations now with $500,000 more is very relevant since the total amount of assets is only $99,932 according to its most recent annual report.
However, we still do not see that the current share price represents the real valuation of the company. We encourage investors to investigate further regarding this company or contact their financial advisor if they want to buy shares.
Conclusion
We added some more information about the recent explosion in the share price of eMedia Group Inc. The fact that the company reduced the amount of outstanding shares and received a new credit line from an investor was appreciated by the market. If the company continues delivering positive news for the shareholders, shares could rebound on promo type efforts. However, investors should be aware that if the company does not provide positive news, the share price may fall, as the share price may not represent properly the current valuation of the company at this point in time.
We will be updating our subscribers as soon as we know more. For the latest updates on EMMD, sign up below!
Disclosure: We have no position in EMMD and have not been compensated for this article.
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