The penny stock of CMG Holdings, Inc. (CMGO) is about to experience a huge Monday session, even though it’s late in filing its latest 10-Q with the SEC. The awareness campaign for CMGO stock is so expansive that you shouldn’t be surprised if you get handed some advertisement in the drive-thru tomorrow morning when you’re picking up donuts for the office. With all the attention on the spin-off/dividend of the Company’s Audio-Eye, traders best watch for the toxic financiers, and there are quite a few, who may be dumping shares before that first bran muffin turns to a #2Flusher.
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CMGO Stock Chart
Market Cap: 7.49M
Close: 0.032, up 0.0021 (7.02%)
Dollar Volume: $68,700
Average Trade Size: 22,884
Issued and Outstanding: 234,082,826
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CMG Holdings has AudioEye Inc., a wholly owned subsidiary of the Company, which has a patented technology that might work for surfing the internet by voice. Yeah, voice recognition software is not new, but the push to make it appear that this could be huge in the wake of the Apple iPhone 5s release and the upcoming expansion of Smart TV.
At the start of the month, CMG issued an 8-K apologizing for not filing its recent 10-Q on time and how the corporate spinoff of AudioEye, Inc. will not disappoint its shareholders. (see here) Call me whatever, but when I see the phrase “shareholders” issued in a PR statement, let alone an 8-K, it automatically triggers alarm bells which calls for deeper investigating.
Aha! Toxic Financing at the highest level!
Between, Asher Enterprises, Inc. (6,288,898 shares at an average of $.004), Aware Capital Consultants Inc. (7,500,000 shares at an average of $.002), Magna Group LLC. (13,330,139 shares at an average of $.0045), Hudson Capital Advisors, Inc. (1,500,000 shares at $.0105), Braeden Storm Enterprises, Inc. (3,00,000 shares at $.01), Martin Boyle (2,800,000 shares at $.0125), Scott Baily and, the most ironic name for a financier, Grassy Knolls, LLC, 31,419,037 shares were issued in debt conversions during the first three months of 2012. And this is just in Notes Convertibles.
Except for Martin Boyle, each still had amounts due which could be converted, some with with a floor of $.01. Looking at NOTE 9: SUBSEQUENT EVENTS, even more shares, 61, 430,977, were issued between March 31 and May 22. Hence, the late filing of the 10-Q for the three months ended June 30, 2012 leaves a huge void for data to trade off of in respect to other amounts converted, warrants exercised, who is dumping and how much.
Think about it – at least 92 million shares of CMGO stock were issued in debt conversions during the first 5 months and 22 days of 2012.
It somewhat falls into place though, the late filing that is, with CMG management’s comments in their Q1 filing. In performing this assessment, management has identified the following material weaknesses as of March 31, 2012:
· There is a lack of segregation of duties necessary for a good system of internal control due to insufficient accounting staff due to the size of the Company
· Lack of a formal review process that includes multiple levels of reviews
· Employees and management lack the qualifications and training to fulfill their assigned accounting and reporting functions
· Inadequate design of controls over significant accounts and processes
· Inadequate documentation of the components of internal control in general
· Failure in the operating effectiveness over controls related to evaluating assets for impairment
· Failure in the operating effectiveness over controls related to valuing and recording equity based payments to employees and non-employees
· Failure in the operating effectiveness over controls related to valuing and recording debt instruments including those with conversion options and the related embedded derivative liabilities
· Failure in the operating effectiveness over controls related to recording revenue and expense transactions in the proper period
· Failure in the operating effectiveness over controls related to evaluating and recording related party transactions
Not really giving a vote of confidence, and that comes straight from the management of CMG Holdings. Per their September 4th 8-K: Management wishes again to thank its loyal shareholders for all of their continued support and will continue delivering a snapshot summary of recent developments. The Registrant will also provide additional updates going forth after the filing of its Form 10-Q which will be a much more in depth view of what Management believes to be a company clearly on the upswing, and growing for our shareholders this year and into 2013.
Sounds the word “share” is soon to be replaced with “bag”.
About CMGO Stock
CMG Holdings Group, Inc. is a marketing communications holding company focused on the acquisition and operation of organizations in the alternative advertising, digital media, experiential and interactive marketing, entertainment, Internet content publication and distribution technology sectors. The Company was formed by a core group of executives who have held senior level positions with several of the largest companies in the entertainment and marketing management industry. The Company delivers customized marketing solutions at to optimize profitability by concentrating our resources in those segments of the marketing communications and entertainment industry. The Company operates in the sectors of experiential marketing, event marketing, Internet content publication and distribution software, commercial rights, and talent management.
Bottom Line: CMGO is the penny stock to watch Monday as well as NGHT: One is to flip, the other is to ride. If CMGO stock even comes near its .055 high from nearly a year ago when, at least, 92 million shares less were outstanding, watch for someone screaming timber as this publicity stunt of AudioEye turns into a plumber trying to unclog the drains of the commode.
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