NuGene International Inc (OTCBB:NUGN) Fall Below $3 Once More
On Monday NuGene International Inc (OTCBB:NUGN) issued a rather encouraging PR. In it the company announced that it had received a $301 thousand reorder from a leading existing distributor and a $71 thousand order from a new distributor. No pennystock venture can scoff at such results but the announcement failed to push NUGN in the right direction and the stock closed 3% in the red on that day. Yesterday the ticker dropped below $3 once again and after losing nearly 6% of its value closed at $2.99.
But why is NUGN sliding when the company is not only generating impressive revenues through their products but they have none other than Ms. Kathy Ireland as a Chief Designer and Brand Ambassador? Well, NUGN’s financials may be far better than what the majority of pennystocks have to offer but that doesn’t mean that the company’s balance sheet can support their current market cap. For the first quarter of 2015 NUGN reported the following:
• $619 thousand cash
• $1.3 million current assets
• $305 thousand current liabilities
• $481 thousand revenues
• $240 thousand net loss
As we said the numbers are not that bad but they are simply too disconnected from the company’s market cap of more than $118 million.
Wait a minute, if NUGN can’t support event their current valuation how was their stock even able to reach a high of more than $4.5 back in June? The answer is quite simple – a multy-million paid pump.
NUGN’s stock was touted by hard mailer brochures for months. The initial production budget was disclosed to be $2.28 million but the last mailers showed that an even bigger amount of money had been set aside for the pump – $4.4 million. The disclaimer stated that Result Corporation, the party providing the money, intends to sell their shares during the promotion. The shares in question are more than likely the 11.1 million free trading shares that have a split-adjusted price of just $0.0033. That is right, some people own shares that are this cheap while at the market NUGN has been trading for over $2 for close to four months now.
It should be obvious that without the artificial hype of the pump NuGene may have significant trouble maintaining such prices. Investors, however, should take into account one more thing. Yesterday the company submitted a rather alarming 8-K filing. Apparently the company Stemage Skin Care LLC has filed a complaint and NUGN, its CEO, and its Chairman of the Board of Directors are among the defendants. Some of the allegations contained in the complaint are copyright infringement, interference with contract and intentional interference with prospective economic advantage.
