It was just three months ago that Church & Crawford (PINKSHEETS: CCWF) shares were trading at a 52-week high of 0.200 and even as recently as December 21, 2011 they were moving at 0.1245 but things have taken an ugly turn for shareholders as the mobile phone software solutions company has hit a rough patch, dropping as low as 0.025 on December 23, 2011, nearing their 52-week low of 0.020 set at the beginning of this year.
Shares of CCWF were holding steady around the 0.10 level up until last week when they moved forward on news that they had secured the global license to use the technology and patents of the Orexis application, a mobile application developed “for anyone who requires to talk to a service provider at any point, in essence four billion people globally.” Trading volume, typically uninspiring, jumped to over 6 million when the news was released and since that date has exceeded 1 million each day.
The catalyst for such a jump was an obvious stock promotion pumping CCWF and latching on to the company’s claim that the global license to use the technology and patents would make them the “first global software company to be providing a call centre experience for users on their mobile and hand held devices.” Really what the promotion did was enable a great number of shares to be dumped for quick profits before losing nearly 75 percent of their value.
Why investors bought into the company remains a mystery as CCWF’s business operations appear less than attractive. What they say is that their mobile solution “answers many of the challenges today, by providing the first mobile application to integrate fully into a call centre infrastructure or providing a new call centre platform for service providers” yet they provide very few details about the nature of the challenges that will be solved.
Instead of giving investors concrete examples the company’s most recent press release simply states possibilities, “Service providers, through the implementation of the Church Crawford application can save in excess of 40% of their cost base, increase customer satisfaction and for the first time ever be able to leverage on an advert model built within the application to create a real revenue source for their organization.”
While it’s one thing to be optimistic it’s another thing all together to just say something for the sake of attracting investors. This appears to be the strategy of CCWF and they must be hoping that those investors ignore or overlook the company’s financial struggles to date.
CCWF has generated no revenue from operations and as of September 30, 2011 they held $5,000 in cash and cash equivalents while carrying total liabilities of $189,500 along with a net operating loss that is nearing $5.6 million. That’s not exactly stable financial footing and to make matters worse for shareholders the stock is extremely diluted with 3,000,000,000 shares authorized.
Perhaps the biggest red flag concerning CCWF was the comment made by Seijin Ki, Director of Church & Crawford, “From the research and service provider feedback that we have through our application provided solution for both service provider and more importantly the customer. There have been many technology applications and companies in the call centre industry that have been quickly snapped up at phenomenal valuations. We are expecting to exceed any previous valuation seen within the industry.”
Essentially what this comment is leading investors to believe is that CCWF is positioning itself for not just a buyout but a significant buyout. This is dangerous ground for any investor due in large part to the fact such prospects don’t often pan out the way the target company hopes. CCWF has shown no real value to their own shareholders much less potential suitors so this confidence appears unfounded at the moment.
It certainly won’t come as any surprise to see shares of CCWF fall further before being propped back up during another campaign but as far as long-term value the company has yet to prove to investors that they know what they are doing.