NightCulture Inc (OTC:NGHT) Got the Promotional Ticket
On the face of it, organizing concerts is not such a difficult task. All you have to do is get in touch with the artist, get some advertisement going sell the tickets and calculate the profits on your way to the bank. When you really get into it, however, things turn out to be a bit more complex than expected. That is why so many concert promoters eventually fail and since we received some emails touting NightCulture Inc (OTC:NGHT) who are in this particular business, we decided to check on them and see if they will make it or not.
There aren’t many small cap companies in this particular sector so it’s fair to say that we weren’t exactly sure what to expect. The good news is that NGHT are actually busy and they have been operating for some time now. They organize annual festivals, they have acquired some companies and they currently run a venue in Texas in which a number of events from the electronic music world are held. They also sell merchandise and the compulsory for these kinds of gatherings beverages.
Their only worry is the fact that they can’t turn a profit. They have been working on it for a while now, but the losses are constant and the accumulated deficit now exceeds $9 million. The rest of the financials according to their latest 10-Q covering the three months that ended on September 30 are as follows:
- cash: $5 thousand
- current assets: $20 thousand
- current liabilities: $1.4 million
- revenue: $483 thousand
- net loss: $149 thousand
The good thing is that, compared to the same period in 2011, the figures look marginally better, but NGHT still have a long way ahead of them before they can reach the elusive profitability.
Things don’t get much easier when you bear in mind the huge investments that are required to run this sort of business. We all know that despite the fact that they are immensely rich, the big artists still receive some massive fees for the concerts and these fees are all paid in advance. Which means that in order to finance the events, NGHT needed to borrow some quite substantial amounts of money. There is at least $1.5 million worth of debentures and they are all convertible into common stock at some enticing discounts. The the latest loan, for example is for the total of $500 thousand and it can be turned into common shares at just 50% of the trading price. Organizing concerts really is an expensive business and unless they can turn things around and start making money, NGHT will have some serious trouble paying the debt off.
And now we will swiftly shift our attention from concert promoters to stock promoters, the ones we’re more familiar with. A quick check onto our database reveals that this is not the first awareness campaign for NGHT. The previous one took place back in October 2012 and the emails sounded just as promising as they do now. When the promotion started, the ticker was hovering around the $0.30 per share mark, but as soon as the hype stopped, it chose a slow but steady downward trend which has so far eliminated all chances of a profit.
Will the same thing happen again this time? Of course, we can’t be sure but, truth be told, we’ve seen many companies suffer the consequences of paid pumps. Colorado Gold Mines f/k/a Cascade Springs Ltd(OTC:CGLD) for example, were targeted by the same promoter that is now hyping NGHT, Damn Good Penny Picks. The emails stopped at the beginning of February and, as evident from the chart on the right, CGLD‘s price took a tumble.
