Red Giant Entertainment, Inc. (OTCMKTS:REDG) Clambers to Over a Cent, Hesitates

Sometimes, real magic happens on the OTC markets, even without the assistance of men in pointy hats. The most recent run of Red Giant Entertainment, Inc. (OTCMKTS:REDG) is proof of that. REDG climbed from triple-zero land to a close of $0.013 in a matter of five market sessions, even though there was no current pump targeting the ticker and no new developments that could have triggered the initial spike.

The wild percentile jumps seem to have to a close on Tuesday. After REDG climbed over the one-cent mark, the last market session showed significant intra-day volatility, with the price bouncing between $0.012 and $0.017. Why the sudden interest in REDG and the tenfold increase of daily share volume? It’s difficult, if not impossible to tell.

The company did publish an update on its situation through a press release but that came a few days after the original price hike and could be interpreted as an attempt to use the momentum and push even further up the charts. REDG posted dreary financials in their latest publicly available report, so their financial standing can be ruled out as a source of sudden interest:

• $39 in cash
• $705 thousand in current liabilities
• $3 thousand in quarterly revenues for Sep-Nov 2013
• $365 thousand in quarterly net loss for Sep-Nov 2013

Those were all figures reported at the close of the quarter ending November 2013. This is quite a long way back in time and REDG still has not provided investors with an update. The new filing is due less than two weeks from now. Additionally, REDG upped its authorized shares from 900 million to a whopping 3 billion in early January, so there’s plenty of room for possible dilution down the road.

There was also a wave of Form 4-s filed that showed a number of insiders received 5 million stock options each, exercisable at $0.0048 and $0.0053. The majority of the options vest immediately. If anyone is confused about the whole deal, this basically means that five REDG insiders can buy up to 5 million common shares each, at a discount of roughly 50% from the current market price of $0.013.

There was also a report on REDG compiled by a third party and published through PR services yesterday that examined the company’s current situation and recent surge in trading volume. The conclusion of that report was that the overall picture ‘can hardly justify … current market cap or share price’. It remains to be seen whether this will have an impact on REDG‘s chart standing.

In closing, we would like to remind traders once more than REDG is a ticker that was pumped viciously by promoters Victory Mark in early 2013, against compensation of $500 thousand, and that pump cost many investors over 95% of their investment. The reasonable thing to do remains the same – traders should do their own, extensive due diligence on any company they plan to invest in, whether it’s REDG or any other, and use official filings as their source and not Twitter posts by so-called ‘investor groups’.