Rainbow Coral Corp (OTCMKTS:RBCC) Taking On More Water
The fact that you’re reading this article probably means that you are wondering why Rainbow Coral Corp (OTCMKTS:RBCC) fell from a 52-week high of over $7 per share a month and a half ago to its current price of just $1.24. We’ll now try to point out some of the potential reasons.
The press releases are not particularly encouraging. With their joint ventures, Naltrexone distribution agreements, and announcements of new developments around some ground-breaking 3-D bioprinting technology, the members of RBCC‘s management team seem pretty optimistic about the future. The fact of the matter is, however, that they are still generating their revenues by selling aquarium accessories in a fish store.
Speaking of which, the latest 10-Q shows a 21% drop in sales on a year-over-year basis and it also shows that RBCC‘s financial position at the end of Q2 was… well, you should be able to find the right word. Here are the figures:
- cash: $2,740
- current assets: $4,524
- current liabilities: $517,798
- quarterly revenues: $27,683
- quarterly net loss: $136,929
Things really weren’t looking good at the end of the second quarter, but despite this, some of you might be feeling a bit adventurous. They might even reckon that RBCC will manage to perform what can only be described as a miracle and turn the tables around. But is this really a possibility? Or is it just wishful thinking?
As we have said numerous times on these pages, nothing is impossible in the world of penny stocks. You should bear in mind, however, that while you might reckon that RBCC is worth more than $1 per share, the members of the management team don’t think so.
If they did evaluate the ticker at these prices, they would have altered the terms of the convertible notes when they performed the 1 for 100 reverse split at the end of May. Instead, they left the ridiculously low conversion rates untouched and they later proceeded to issue exactly 8,402,094 shares in order to satisfy $167,982 worth of debt.
With nearly all of the outstanding shares issued at just $0.02 apiece, staying out of the sub-dollar levels might turn out to be a tall order for RBCC. A point proven by early trading today. It’s only been several minutes since the opening bell, but the ticker is already sitting at $1.12 per share (about 10% in the red).
