eCrypt Technologies, Inc. (OTCMKTS:ECRY) Is The Next StockTips Pump
Yesterday, a couple of hours after the end of the trading session the infamous pumper StockTips issued another email alert. In it the newsletter announced its newest pump target – the stock of eCrypt Technologies, Inc. (OTCMKTS:ECRY). According to the disclaimer at the bottom of the email the promotion will have a total production budget of $5.1 million. As always the paying party providing the money for the promotion is listed as Laluna Services, Inc.
In addition to the StockTips tout a couple of other pump outfits also decided to join the promotion but they did so for no disclosed compensation. The influence of the pumpers and the vast budget will most certainly attract the attention of the market but what are investors really going into?
ECRY is a pennystock company that operates in the cyber security industry. In their own words eCrypt offers a “military strength email and encryption system” but how well equipped are they to pursue their business plans? In order to answer that question let’s take a look at the quarterly report filed Last Friday. It covers the period ending September 30 and contains the following number:
• $25 868 cash and total current assets!!!
• $31 thousand total assets
• $1.8 million total liabilities
• ZERO revenues
• $164 thousand net loss
The rather atrocious numbers are not the result of a particularly bad financial quarter either. For the same period last year the company reported $15 thousand in cash, $1.5 million in current liabilities and revenues of just $57 dollars. On November 4 eCrypt signed a five-year contract with an unnamed client. Under the terms of this deal the company will receive an initial fee of $25 thousand and annual fees of $5015. The payment is not that impressive but at least some revenues will be registered. The problem is that ECRY expects to need around $5 million for its planned business activities.
With such dismal financials it is no wonder that investors have been reluctant to put their trust in the company and ECRY has been seeing only minimal amounts of trading. The average volume for the stock is just 30 thousand and days with absolutely no trades are not that uncommon. All that might change though so you must ask yourselves the question – who stands to benefit the most from the increased awareness?
Well, opening the annual report for the fiscal year ended March 31, 2010 reveals that back in their fiscal 2008 ECRY issued a total of 116 million shares for just $55 thousand in cash, or in other words, the average price of each share was around $0.0005. During the fiscal 2009 17.5 million shares priced at $0.008 were sold. More recently, between July, 2014, and October, 2014, the company sold around 1.5 million units priced at 10 cents each. These units consist of 1 share and half a warrant (one full warrant can be exercised at 15 cents for the purchase of 1 share). Even at the current market price of $0.132 per share the people holding these shares could reap some hefty gains but if the pump pushes the stock higher they will reap even bigger profits.
It should be obvious that ECRY must be regarded as a pump play only. The current promotion will certainly offer opportunities for quick gains but if you miss the right timing the losses could be devastating – just take a look at the previous StockTips pump for Alkame Holdigns, Inc. (OPTCMKTS:ALKM) that is currently trading at 6 cents down from a pump-induced high of half a dollar.
