Code Green Apparel Buying Zoombang, Shares Surge 100%

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Wednesday, August 29, 2018

It may have the dreaded "stop sign" on OTC Markets, but shares of sustainable apparel company Code Green Apparel Corp. (OTCPK:CGAC) are rising on Wednesday on a large increase in volume on acquisition news. The Laguna Beach, California-based company said today that it has signed a binding letter of intent to acquire Katy, Texas-based Zoombang Companies, a manufacturer of impact protection gear for a wide array of applications.
Terms for the acquisition were kept confidential. Management only disclosed that the acquisition will be an all-stock transaction and that Code Green has committed to invest up to $1.5 million to further expand Zoombang's operations. Zoombang makes products using its proprietary polymer technology that are engineered to manage energy by dissipating, transferring, or accentuating blunt force trauma, shock, g-force loading, and vibration.
The products are used to protect people in sports, military, police, tactical, medical and industrial applications. The company can trumpet 14 NFL teams and 11 NHL teams as customers. Testimonials on the Zoombang website include several from NFL and NHL equipment managers and players praising the quality of the products.
"With Code Green’s extensive background in sourcing and production, it was clear from the outset that there are many synergies between the Zoombang Companies and the expertise that Code Green has to offer," said Joseph Scott, Zoombang co-founder and CEO. He added, "We believe these synergies will immediately enhance both companies’ abilities to drive existing and new revenue streams through the sale of our wide range of products with both Zoombang’s current customer base and to engage in new sales endeavors."
OTC Markets slaps companies with a stop sign logo if the watchdog deems that the company "may not be making material information publicly available." The last quarterly report Code Green filed with the SEC covered the quarter ended September 30, 2017. During that quarter, the company logged revenue of just $10,785, bringing total sales for the first three quarters of 2017 to $44,264. The company listed cash on hand at $32 (thirty-two dollars). Given those figures, this deal has the feel of a reverse merger to bring Zoombang public.
Traders are responding positively to the acquisition news. Over the past 30 days, shares have traded an average of 6,395 per day. Through 1:30 PM EDT on Wednesday, over 300,000 shares have traded, causing the stock to double in value to $0.06 per share.

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