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Chinese Reverse Mergers: Should You Be Concerned with Them?

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Chinese Reverse Mergers: Should You Be Concerned with Them?

Is there a chance for eCrypt Technologies, Inc. (OTC:ECRY) to get the up move again? After a series of gains over the past week, yesterday the stock moved back down on the chart. Though, maybe ECRY still has the opportunity to climb up due to the latest promotions of the stock.

Yesterday, ECRY started a promotional campaign reporting that the company has just appointed a former congressman to its board. The stock alerts appeared on a couple of promotional websites that have received a compensation of $10.000 for the campaign. The paying party was not revealed, though the promotions most probably will heat up ECRY’s market position any minute.

In fact, by releasing the news on the company’s new appointment, eCrypt Technologies has additionally secured its stock price with optimistic statements and future projections for its new product. Yet, only time is capable of proving the expectations of the management team.

eCrypt Technologies, Inc. is an information security firm focused on ease of use and end user control. Apart from the congressman appointment, the company has not produced much news on its business, excluding its recent financial report. However, it does not look as inspiring as the management’s statements.

By December 31, 2010 the liabilities of eCrypt were more than five time higher than its total assets and the stockholders’ deficit has exceeded $205 thousand. Meanwhile, the company’s net loss has been increasing as well as its accumulated deficit during the development stage period.[BANNER]

eCrypt anticipates that it will require approximately $4 million of working capital to complete all of its desired business activity during the next twelve months. Thus, the management plans to seek additional capital through a private placement and public offering of its common stock. However, the team claims that the company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations and/or obtain the necessary financing and repay its liabilities. So, in case ECRY doesn’t find a way to achieve profitability, its future existence might be questionable.

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During the last trading session, Horiyoshi Worldwide Inc. (OTC:HHWW) stock experienced its all-time low.

For some investors this fact means a short-term opportunity, for the others remained the loss.

Yesterday, not only the strong plunging down of the share price with 25% between the sessions was a signal that for now numerous investors do not want to respond to the company’s call to look to the future. The sharp decline of HHWW was confirmed in more than 982K shares changing hands.

Technically, the downward trend was not confirmed, but the shadow of the bold red candlestick shot the lowest price of HHWW at $0.45 per share. Although HHWW has a not so long trading history, the downward share price movement prevails in it.

Almost four months ago, HHWW was traded at $3 per share. Yesterday, the company’s stock was valued by investors as a seven times less worthy investment.

During this time, as opposed to many investors with short-term plans for HHWW, those with intentions to hold the stock on the long-term are surely counting losses already.

Meanwhile, the short-term invested capital in HHWW “made thicker ” investor pockets and bank/trading accounts. The regular stock promotions gave investors this opportunity.

The shares’ performance reflects not only the variety of different investment strategies. It mirrors internal specific for the company developments, just like such related to the ambient environment.

In its last press release, Horiyoshi Worldwide Inc. made an appeal to investors, referring to the above mentioned ambient environment, which is maybe good. According to the company’s reports, all Horiyoshi products have been produced in Japan in order to guarantee the exclusivity of the brand and the artwork.[BANNER]

At the same time, in the same reports, Horiyoshi Worldwide Inc. has not mentioned a word about its products. There, on the company’s balance sheet there are no inventories booked at the end of the last two years. Further more, the company reported two “crucial numbers”. The total assets reported were $0 and $53 on September 30, 2010 and December 31, 2009 respectively. These amounts represent the only one item named “Cash and Cash Equivalents” in the company’s assets.

A more detailed analysis of the financial reports may only raise more questions related to the developing Horiyoshi Worldwide Inc. One of them is: “If no stock in the company’s “warehouse” was available for the last two years, then why for the same period HHWW had zero revenues?”…

Looks like many investors also asked these questions these days. Perhaps, many of them, without even making a SWOT analysis for Horiyoshi Worldwide Inc., decided that not external threats but internal weaknesses prevail. This could mean that there are less company strengths and more not so strong long-term investment opportunities.

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One hundred days have passed since Xynergy Holdings Inc. (PINK:XYNH) shifted more than 1 million shares a day. With the current trading volume having been reduced to the absolute minimum, an ambitious promoter, who has acquired 1.5 million XYNH shares, has embarked on an advertising campaign to bring back the spark XYNH stock needs in order to regain ground.

Last Friday, XYNH’s management revealed it had approached an independent party to conduct tests on the company’s new hydrogen fuel technology. As a consequence, the trading of XYNH stock tripled in volume. However, the absolute numbers were so small that the three-fold increase in volume failed to exert any influence on the price. The latter closed at its Thursday level of $0.024 per share. [BANNER]

Now, back to basics. The latest investor awareness program was launched yesterday. This time, it seems to have been aimed at generating huge trading volume and a mammoth price surge, which would give the promoter the opportunity to get rid of its 1.5 million XYNH shares as soon as the price has reached a maximum level. Plus, Friday’s announcement was so vague that it did not mention any concrete terms. Obviously, the technology still has a long way to go before being implemented into a final product. Even if the tests were to commence tomorrow, how XYNH will pay for them is unclear. With a working capital deficit of $120K and a nine-month net loss of $180 thousand, the management will most probably resort to issuing new stock and diluting its current shareholders.

On the other hand, yesterday’s trading alert might prove successful for the company as well. If it manages to raise enough capital to ensure the further development of its revolutionary technology, it might eventually turn profitable and strike it rich.

While the positive hypothesis mentioned above may not be guaranteed, what is for sure is that with only 34 million outstanding shares (out of 1.9 billion) the company will definitely be increasing their number, at the expense of its most loyal followers.

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Have you read the news lately? If you follow Lexaria Corp.(OTC:LXRP) and own some stock in the company, you can hardly miss it. It seems that some oil fields can be qualified with – the deeper you drill, the better it gets. Well, at least when assessing the feasibility of future operations. Geological results on paper about resources in a given property should be similar to future financial results on paper. At least paid promoters seem to think so. So, what is the investor dealing with here? It depends on the perspective but generally, it is volatility, stock promotion and a company announcement, coupled with what should be a great oil and gas company in a short period of time. Let us take it one step at a time.

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Have you read the news lately? If you follow Lexaria Corp.(OTC:LXRP) and own some stock in the company, you can hardly miss it. It seems that some oil fields can be qualified with – the deeper you drill, the better it gets. Well, at least when assessing the feasibility of future operations. Geological results on paper about resources in a given property should be similar to future financial results on paper. At least paid promoters seem to think so. So, what is the investor dealing with here? It depends on the perspective but generally, it is volatility, stock promotion and a company announcement, coupled with what should be a great oil and gas company in a short period of time. Let us take it one step at a time.

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Have you read the news lately? If you follow Lexaria Corp.(OTC:LXRP) and own some stock in the company, you can hardly miss it. It seems that some oil fields can be qualified with – the deeper you drill, the better it gets. Well, at least when assessing the feasibility of future operations. Geological results on paper about resources in a given property should be similar to future financial results on paper. At least paid promoters seem to think so. So, what is the investor dealing with here? It depends on the perspective but generally, it is volatility, stock promotion and a company announcement, coupled with what should be a great oil and gas company in a short period of time. Let us take it one step at a time.

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