- Shareholders anxiously await a possible settlement
- Lawsuit seeks $200 million in damages
- The potential for a 300%+ gain if the recent highs are re-reached
- Recently Filed 12(g) (15-12g)…What does it mean?
- Ownership in other public companies
CMGO Holdings Group (CMGO) subsidiary XA (The Experiential Agency), is part of a $200 million dollar lawsuit that dates back to 2016. Speculation of a settlement outside of court is highly anticipated, as anxious shareholders await a potential payday.
History of the suit
For years, XA The Experiential Agency made millions organizing television upfronts (annual events hosted by networks to showcase new shows to advertisers) and planning promotional events for shows on NBCU’s USA Network, Bravo and the Oxygen Channel. But when XA was acquired by CMG Holdings, the new owners were having trouble tracking all that money. According to a lawsuit filed by CMG, that difficulty was because ex-XA execs and employees had established an elaborate shell game involving alleged XA subsidiaries, moved money between companies, and left XA with nothing but expenses while the employees seized the profits.
In 2015, CMG sued Joseph Wagner, Darren Andereck, Jean Wilson, Jessie Lomma, Michael Day, and Remegio Gudin along with their new enterprise HudsonGray, claiming RICO Act violations along with a dozen state law claims. In 2016, A federal judge ruled the case can proceed, and hinted that the $200 million CMG is asking for in punitive damages may not be a stretch.
CMG claims the shadow company, HudsonGray, stole existing and future business. CMG is asking for $20 million in compensatory damages, wants three times that amount for the alleged racketeering scheme and ten times the amount as punishment to the defendants.
Understanding the LEGAL Aspect
A stay can be lifted by the judge – it essentially means that the court is going to take a break and let the parties figure out a number for settlement. This is an EXCELLENT thing because it means that the parties have realized it’s not worth fighting for more months and paying higher lawyer fees. On the other hand, the lawyers and parties are both probably tired and working all night and day through the weekends to reach a number – they want payday and to be free as well!
Just because the stay is until July 30 does not mean it will go until then, most likely not even close to July 30. The way negotiations are done is that every item that can be discussed is broken down and then each item is negotiated. In diplomatic and much larger settlements this can take a LOT of time, but I doubt it will in this case for a few reasons: (1) This case has been going on for years. All the evidence and research is already done. (2) This is a 200 million dollar settlement which is a lot in the OTC world but in terms of settlements, there aren’t that many items that can possibly be discussed. (3) The judge is absolutely fed up with the defendants. They are not going to try and piss off the judge anymore. If you don’t believe me just read one, just one, statement by the judge and you will see how annoyed he is with the defendants.
Law is NOT a game. A stay for settlement like this is not a “let’s give it a try and see what happens”. It is a LEGIT deal and it is taken very seriously. Both parties will do their best to settle as quickly as possible – they don’t just accept a stay and settlement negotiations without deciding to go in 100%.
Other OTC Companies Seeking a Settlement
There are a number of penny stock companies currently in the same boat as CMGO, where they are going through the legal process hoping for a settlement outside of court or that a judge/jury will award them just monetary compensations.
- OTCQB: VPLM Voip-Pal.com has initiated Federal infringement suits against: Apple, AT&T, Verizon and Twitter. is battling Apple, Samsung and a few others, as they feel these telecommunication giants infringed on their proprietary Voice-Over-Internet Protocol technology patents.
- OTC: SECI Sector 10, Inc. is currently in a 9-year court battle against Dutro Company and its affiliated persons/parties. The case is ongoing, but at one point, the news of the case, never mind a settlement, caused the company’s share price to increase 4000% in February of this year.
- OTCQB: WDDD is a leading intellectual property developer and licensee of patents related to 3D online virtual worlds. The Company has a portfolio of 9 US patents and is going after Activision and their World of Warcraft and Call of Duty gaming. This suit started in 2016 and is still going on.
- OTC: UOIP UnifiedOnline, Inc. is another penny stock with a “patent portfolio”. This Wednesday there will be a panel of 3 judges at the PTAB ruling on a petition. The company’s fully owned subsidiary ChanBond LLC. is suing Charter Communications Inc., Time Warner Cable Inc., Comcast Corp. and others, court records show. The company, labled “Caveat Emptor”, has the skull and crossbones designated by OTCMarkets, yet the share price is starting to see some life prior to Wednesday’s hearing as risky investors gamble on a positive outcome.
As seen with the 4 previously mentioned companies, court cases can take years to conclude, with lots of delays, appeals, and motions, but potential risk versus reward is great if and when a settlement is won.
CMGO Subsidiaries
CMGO operates under 2 subsidiaries… both XA, the Experiential Agency and Audio Eye, Inc. and owns 58% of the publicly traded company Good Gaming Inc.
- XA (The Experiential Agency) owns 100% …XA is an award-winning, comprehensive, experiential branding agency on the forefront of the creative universe. XA is also an adrenaline-fueled world that encompasses the newest technologies, smartest mediums, and hottest engagement platforms. Their expertise helps companies bridge the gap between brands and buyers under one seamless sky known as the Experiential Planet.
- Audio Eye, Inc (OTC: AEYE) according to OTCMarkets company description, they operate as a subsidiary of CMGO, but have read they simply own 5 million shares of the company. At this time, we are unsure which is true. AudioEye is a technology company serving businesses committed to providing equal access to their online content. Transforming how the world experiences digital content, AudioEye solves issues of accessibility and enhances the user experience for the broadest audience possible.
- Good Gaming Inc (OTCQB: GMER) owns 58% … Good Gaming is a leading competitive gaming and social network platform targeting over 250 million esports players and participants worldwide who want to communicate with each other, develop strategies, and compete at novice, competitive and professional levels. Good Gaming has taken a strategic multifaceted approach in the esports industry with products and services ranging from multiple Minecraft servers, a proprietary tournament platform, high school esports leagues and soon to come virtual reality centers. The esport industry continues to experience exponential growth going from $500 million to $1.2 billion over the last two years while industry analysts forecast a $5 billion global industry by 2020. Good Gaming seeks to create and exploit opportunities as the industry allows.
Recent Filing…Is CMGO Going Dark?
CMGO recently released a Edgar filing “Termination of Registration of a Class of Security Under Section 12(g) (15-12g)” on June 7th in which they could be going dark.
“Going dark” refers to the process of voluntarily delisting a public company’s shares from a national securities exchange or inter-dealer quotation system (if so listed or quoted) and subsequently deregistering the shares under the Exchange Act, thus suspending or terminating the company’s public reporting obligations under the Exchange Act. Delisting alone does not eliminate public reporting requirements. Many non-listed companies are also reporting issuers. However, for such an unlisted public reporting company, the lack of a stock exchange listing may substantially diminish the benefits of remaining a public company.
“Going dark” should not be confused with a “going private” transaction. A “going private” transaction generally involves the cash-out of all or a substantial portion of a company’s public shares so that the company becomes eligible to delist and deregister its shares under the Exchange Act. “Going private” transactions can take many forms and may involve a merger, tender offer or reverse split of the company’s shares. “Going private” transactions require extensive and detailed disclosure filings under Rule 13e-3, the “going private” rule. “Going private” transactions are often undertaken by or at the direction of controlling shareholders or third party acquirors and require extensive board consideration, disclosure, fairness opinions, SEC filings and often a shareholder vote.
Share Structure
According to OTCMarkets.com the company currently has a STOP SIGN as information has not been updated in a while. The market cap is $2,835,000 based on an updated outstanding share count (from nearly a year ago 5-17-2017) of 450,000,000 shares. The site’s company overview also lists the float at 215,000,000, a number last update 2-03-2014. It is believed that the company has “maxed out” its number of outstanding shares, which is both good and bad. The good, CMGO can no long dilute or put more shares out into the open market. The bad, if CMGO needs to raise capital for any reason, they no longer have the ability to issue stock for these purposes.
About CMGO Holdings Group
CMGO Holdings Group, Inc. is a full-service marketing and communications holding company. CMGO’s mission is to build a national platform of exceptional companies that deliver solutions in the areas of alternative advertising, social media marketing services, event management and commercial rights. CMGO is seeking to expand its national presence via its acquired companies, capitalizing on their intellectual properties, patents, sales and marketing, new product development and continued operations via economic recovery. CMGO owns and operates wholly-owned subsidiaries, XA, The Experiential Agency, Inc. and Audio Eye, Inc.
Investor Summary
CMGO has pulled back nearly 70% from its recent high of $0.021, so with the anticipation of a settlement out of court, prior to the July 30th benchmark, things could heat up fast. If there is a settlement of a multi-million dollar amount, the per share ratio is mouth-watering based on the current 0.007 price point CMGO is currently trading at. ($20 Million = $.044/share — $60 Million = $.133/share — $200 Million = $.44/share — $280 Million = $.62/share) Even as little as $10 million would get shareholders a triple (300% pop) as that’s 0.02+/share. The share price “chartwise” has been nice and steady the month of June, creating a strong base and ready to retest those recent $0.021 highs again on speculation alone.
Disclosure: PSInvestor has not been compensated by any of the above mentioned companies, nor do we own a position in any at this time. To read our full disclaimer, please click here.
