NightCulture Inc (OTC:NGHT) Or Why Are Promotions Bad For Your Company?

The first time that we wrote about NightCulture Inc (OTC:NGHT) was on March 12 and quite a lot of things have happened since then. Recently, one of the biggest festivals organized by NGHT took place and, if the press releases are anything to go by, the show was great and the audience was even bigger than NGHT themselves expected. They also recently published their annual report and they were so happy with the figures, that they once again went on the news explaining how they have grown over the past year and how the future promises to be even brighter.

We wrote about them before those things happened and if you check out our old articles, you will see that we never doubted their events and we also said that when a comparison is made between the previous financial statements and the one that we had to work with back then (the one for Q3 of 2012) we saw that they are indeed moving forward. So what’s our problem with NGHT?

Well there are a couple, actually. The first one is the fact that although every report shows revenues that are quite a bit more optimistic than the ones before it, NGHT can’t seem to get rid of the losses that have plagued their financial statement since the very beginning. The story with the new annual report is much the same. Here are the most important figures:

• cash: $31 thousand
• current assets: $53 thousand
• current liabilities: $6.6 million
• yearly revenue: $3.1 million
• yearly net loss: $1.6 million

When you compare these financials with the ones for 2011, you will see that their revenues have indeed grown by a massive 197%, but you will also see that the net loss has shown quite a bit of movement as well. At the end of 2011 it was $511 thousand which, as you can see, is less than a third of the current value.

Until NGHT manage to get rid of the continuous losses and start making money from the concert business, we are reluctant to call them a long-term investment option. At the moment all we can do is wish them the best of luck and move on to the second big issue that stands in front of NGHT at the moment – the promotions.

The first one that we managed to intercept was back in October 2012. It was relatively small and probably because of this, the effect on the ticker wasn’t that dramatic. Then came March, and it would seem that the third parties decided that this is the month for NGHT. The first email was sent by Damn Good Penny Picks on March 11 and it was followed 18 more from promoters of all shapes and sizes. That was for March only. Then, at the beginning of April, we received some more from well paid newsletters. So what’s the score?

Well, considering the fact that NGHT appears to be a real company with real employees and real operations and especially having in mind the fact that their financial statements suggest that they are moving in the right direction, you would probably expect that their shares have remained relatively stable throughout the period. You’d be wrong. A quick calculation reveals that since the beginning of the first pump in October, they have lost more than 74%.

Yesterday, we received yet another email, this time from Orbit Stocks, and we can see that right now, just a few hours into the trading session, NGHT are a further 20% down compared to yesterday’s close. Of course, we can’t be sure how the ticker will perform until the closing bell, but if we have to be honest, we’re struggling to see it recovering. Not least because of the performance from previous promotions but also because of the spectacular failures of Orbit Stocks’ previous picks.