Barfresh Food Group Inc (OTCMKTS:BRFH) Corrects
On Wednesday Barfresh Food Group Inc (OTCMKTS:BRFH) signed an agreement with PepsiCo North America Beverages, a division of PepsiCo, Inc. (NYSE:PEP). The news immediately caught the attention of the market and on that day the stock opened with a massive gap up and closed with a gain of nearly 20%. We warned you, however, that the performance wasn’t entirely positive as BRFH closed at $0.70, below their opening price of $0.727.
That became even more clear during yesterday’s trading. After a turbulent start of the trading day the ticker managed to stabilize around the 70 cents mark for the majority of the session. Around half an hour before the closing bell though it dropped down and finished the day at $0.68 for a loss of 2.86%.
For a pennystock to sign a deal with a division of none other than Pepsi should be massive so why is BRFH not surging up the chart? Well, at the moment the company commands a market cap of over $53.1 million and although their financials are far better than what most other pennystocks have to offer such valuation may be a bit too much. According to the latest financial report BRFH finished the quarter ended June 30 with:
• $3.5 million cash
• $3.9 million total current assets
• $1.43 million total current liabilities
• $169 thousand revenues
• $1.7 million net loss
As we said not many pennystock boast cash reserves of around $3.5 million. For the quarter BRFH also reported revenues 173% higher than the ones for the same period during their previous fiscal year. Still, sales of less than $170 thousand fail to inspire much confidence especially when at the same time the net loss for the period is in the millions.
Investors should also keep in mind that the back in March BRFH raised $5.27 million through a private placement. Barfresh sold 10,550,000 shares at $0.50 and warrants to purchase up to 5,275,000 shares with a per share exercise price of $0.60. If the company doesn’t slow down its burn rate it could be forced to once more rely on the sale of shares for additional funds. According ot the quarterly at the end of June there were $376 thousand worth of convertible notes that can be turned into shares at a price of $0.25 per share.
It remains to be seen if BRFH will be able to keep their recent gains or if their stock will slowly drop back down. Even if you believe in the potential of the company be sure to do extensive research before committing to any trades.
