ForeverGreen Worldwide Corp (OTCMKTS:FVRG) Files Its Q2 Report and Crashes
ForeverGreen Worldwide Corp (OTCMKTS:FVRG) isn’t exactly the most liquid stock out there, but compared to some of its OTC counterparts, it does seem to be relatively active, not least because it hasn’t registered a zero volume day in quite a while. Unfortunately, its performance leaves a lot to be desired.
Spurred on by a few optimistic press releases, the ticker logged quite a run at the end of Q1 and the beginning of Q2. After smashing its way through the $1 per share mark, it reached a 52-week high of $1.85 on April 14. Sadly, it stalled at these levels and slowly but surely, it started dropping. The slide turned into a crash on Friday when FVRG wiped out nearly a fifth of its market cap, finishing the day at $0.81 per share.
A few hours before the first sub-dollar close in four and a half months, FVRG issued a press release and if you check out its headline, you might be left a bit perplexed by the crash. The PR said that the company has recorded a 14% increase in revenues on a year-over-year basis and it also informed us that the gross profit margin has improved during Q2 of 2015. These are not exactly catalysts for a drop, but once you open the actual 10-Q and take a closer look, you’ll see why FVRG behaved the way it did on Friday.
Here’s a snapshot of the most important figures:
- cash: $518,390
- current assets: $6,426,204
- current liabilities: $9,601,815
- quarterly revenues: $16,079,017
- quarterly net loss: $1,446,797
There is indeed a 13.8% year-over-year jump in revenues, but on a sequential basis, things are a little bit different. Sales during Q2 have shrunk by about 6.5% when compared to the ones for Q1 which, in turn, are about 3% lower than the results from Q4 of last year. The bigger problem, however, lies with the bottom line. Although the revenues and the gross profit margins were lower during the second quarter of 2014, FVRG managed to close the period with a net income. As you can see, things were a little bit different this year and investors are understandably nervous. But should they really write FVRG off completely?
Well, the management team said in the 10-Q that the increased expenses during Q2 of 2015 are connected to the company’s global launch as well as a few other factors and investors are left with the impression that things should be back to normal in the near future. There’s a conference call later today during which the people in charge will probably shed some more light on their plans for the next few months.
So there might be a light at the end of the tunnel. Then again, that doesn’t mean that you shouldn’t consider all the risks carefully. In May, an unrelated third party got 910,000 shares at $0.70 as a conversion of debt. At the end of June, the unnamed unrelated parties held $331,756 worth of notes convertible at $0.20 and an $890,000 note convertible at $0.70. The convertible debt combined with the potential dilution could prove to be a big threat looming over FVRG.
