Rainbow Coral Corp (OTCBB:RBCC) And The Two Sides Of The Coin
Rainbow Coral Corp (OTCBB:RBCC) jumped by as much as 92% yesterday and this was the result of a long line of press releases that have been desperately trying to get investors excited. RBCC have been all over the news in the recent weeks and every single one of the announcements is full of optimistic projections about Rainbow Coral becoming a leader in various spheres of the medical industry. There are also press releases about distributions agreements and, of course, the almost compulsory comparisons between them and serious companies with multi-billion dollar market caps like Biogen Idec Inc. (NASDAQ:BIIB).
We were rather surprised to see that there was no paid promotion for the ticker, but when we saw what happened the last two times we received emails about them, we can sort of understand why the preferred method of touting this time is solely through the optimism of the press releases. The two promotions from February did little to lift the stock off the ground and even the fall during the days after the hype was gone wasn’t that dramatic. Still, RBCC‘s chart does resemble a roller coaster and all the ups and downs look suspiciously similar to the results that we see from a typical paid pump. So, what caused them?
A quick look at the archives reveals every time the ticker gains some ground in a matter of days there is an accompanying stream of PR excitement. There’s nothing wrong about that but what disturbs us is the subsequent falls which means that while on July 30, 2012, (just days after the reverse stock split) the ticker was traded around $1.50 per share, right now, even after yesterday’s run, it’s at $0.38. In other words, a loss of around 74%. But what about the future? Is there anything to suggest that RBCC will be able to return to their former glory?
Well, the press releases are, indeed, very optimistic but you should have in mind that they’re trying to make it in a business worth billions upon billions of dollars with the following financials:
- cash: $17 thousand
- current assets: $46 thousand
- current liabilities: $133 thousand
- quarterly revenue: $ 76 thousand
- quarterly net loss: $995 thousand
- accumulated deficit: $1.5 million
That said, the current financial situation might be a bit different since the figures above are taken out of RBCC‘s latest quarterly report which covers the period before December 31, 2012. In other words they’re six months old and the fact that the management team are so reluctant to give away any up-to-date information is enough of a worry in its own right.
When you do a bit more research, things start to look even more shady. Back in October 2011, there was a change in the management team when Louise Foxwell stepped down as CEO and the position was taken over by a person called Patrick Brown (who, by the way, is also at the helm of On The Move Systems Corp (OTCMKTS:OMVS)). Shortly after, the address of the company headquarters was changed to 495 Grand Boulevard, Suite 206, Miramar Beach, FL, 32550. When you look up this particular address on the Internet, you will find that it’s offered as a virtual office.
More worryingly, if you do a bit more research, you will find that this is also the business address of several other publicly traded penny stocks – NuEarth Corp. f/k/a Eco-Rx Inc New (OTCMKTS:NUEC), Aristocrat Group Corp (OTCMKTS:ASCC) and First Titan Corp (OTCBB:FTTN). If you are following our articles closely, you will probably know that we’ve been writing about ASCC and their CEO, Robert Federowicz (former CEO of FTTN) in the past couple of days. And since we mentioned him, here’s something for those of you who love conspiracy theories.
As a recent 8-K form published by RBCC states, when the change in the management team was done back in 2011, there was also a change in the control of the company and the former CEO transferred 9 million shares to an entity called Glendive Investments in exchange for $10 thousand. We wanted to find some information about Glendive but as hard as we tried, we could uncover absolutely nothing. The only thing that we know is that they are a Polish company (as per the 8-K). Can you guess where Mr. Federowicz was born?
Of course, this might be just a coincidence, and the fact that there’s movement around most of Mr. Federowicz’s companies (there are a few of them) might also be just Lady Luck playing games, but even if that’s the case, RBCC still remains a risky investment which is why you should be really careful before jumping in on the hype.
