Enova Systems, Inc. (PINK:ENVS) Ran out of Juice
It’s no secret that we still rely mainly on our internal combustion cars because their electric counterparts are lagging behind in terms of range. The time it takes to charge the batteries up is also a bit of an inconvenience. In this sense, Enova Systems, Inc. (PINK:ENVS) is a typical electric car.
Just like the electric automobiles, it promises to play a major part in our lives in the future. When you abuse the metaphor even further, you will see that, just like the electric cars have the characteristics to be faster and more exciting than the gasoline alternatives, ENVS also have some good-looking figures to show:
- $3 million in current assets
- $822 in current liabilities
- $1 million in revenues for the nine months that ended in September 2012
Here, though, the problems start to appear and, predictably, once the pumpers pulled the metaphorical plug, ENVS‘ batteries fell flat.
After the impressive run of last Thursday, they plummeted down during Friday’s session when they lost a total of 42%. Yesterday they took another dive wiping out a further 32% and, looking at the price at the time of the writing, they could be in for the same treatment today. So why did this happen?
Well, most likely investors put too much trust in the emails that they received back at the end of February. Indeed they sounded optimistic, but it doesn’t take long to see that it’s not all well and good.
Although, ENVS manages to keep their working capital positive and despite the fact that they did register some impressive revenues for a small cap company, they are still unable to produce the electric drive train systems cheaply enough. This all results in an accumulated deficit of more than $155 million and a net loss for the nine months that ended in September 2012 of $4.7 million.
With this sort of figures they will never be able to maintain the $0.089 per share that they managed to reach last Thursday and if they don’t do something about it, they could go under altogether. Having in mind that they were recently forced to lay off around 80% of their employees, this could happen sooner than we think.
What really pushes our buttons, though, is the fact that the pumpers who receive some hefty compensations for their optimistic emails seem to deliberately leave out those facts. Eventually they do come out and, before they do, some people probably make quite a lot of money riding on the backs of ordinary investors, but it also has a huge impact on the company credibility as a whole. And if the company, like ENVS is a serious one with running operations, the consequences could be even more devastating.
We have included the charts of a couple of companies that were promoted recently by Fast Moving Stocks – one of the newsletters touting ENVS. We’re talking about O2 Secure Wireless Inc (PINK:OTOW) and Odyssey Pictures Corporation (PINK:OPIX). Although both companies are working at a loss, they have generated some revenues according to their latest reports and they might even get the chance of being profitable one day. The problem is, people will now think twice before investing in them since they are aware of what could happen in case they get pumped once more.
