Innovus Pharmaceuticals Inc (OTCMKTS:INNV) Logs Another Correction
Earlier this month the stock of Innovus Pharmaceuticals Inc (OTCMKTS:INNV) formed such an amazing run up the chart that in just a couple of sessions it climbed all the way from an opening price of $0.06 to a new 52-week high of 20 cents per share. Since then, however, the performance of the ticker has been far less positive – out of the last six sessions five have ended in losses. On Friday the company continued to retrace its steps down the chart and after dropping by 5.66% it closed at exactly 10 cents per share.
The last time INNV achieved a green close was on April 19 when the equity research firm SeeThruEquity set a price target of 80 cents per share for the stock but the positive effect of the announcement vanished almost immediately. Still, how realistic is such a valuation?
Unlike many of the pharmaceutical pennystocks out there INNV is actually generating respectable revenues. The problem is that at the end of last year the financial state of the company was still far from encouraging. The annual report showed that as of December 31, 2015, INNV had:
• $56 thousand cash
• $544 thousand total current assets
• $2.73 million total current liabilities
• $736 thousand annual revenues
• $4.2 million net loss
In addition to the grim balance sheet investors have to take into account the six convertible notes that were sold by INNV during the third quarter of 2015 for $1.32 million in gross proceeds. These notes can be converted into common shares at a price of 15 cents per share. At the moment INNV has dropped way below that price but if the stock surges up the chart the noteholders could become increasingly tempted to convert their notes.
The company expects to report much better results from now on, though. INNV‘s CEO has stated that they project finishing 2016 cash flow positive with profitability being reached in 2017. Such a bold prediction isn’t without merit. Last month the company acquired Beyond Human LLC, who, according to the PR for the acquisition, finished 2015 with gross revenues of $2.2 million and net profit of $400 thousand. Currently INNV have 13 commercialized products. The company is also waiting for an ANDA approval by the FDA for their FlutiCare product.
It remains to be seen, however, how well INNV‘s management will execute their plans. In the meantime the red flags around the company shouldn’t be underestimated. Do your own research and adjust your trades accordingly.
