The Neologic Animation Inc (OTCMKTS:NANI) Pump Yields Results
Minutes after we published Friday’s article on The Neologic Animation Inc (OTCMKTS:NANI), we received an email from Stock Mister who are now part of the rather big promotional fellowship employed to tout NANI‘s stock. “Employed” is a crucial word right here because according to their disclaimer, Stock Mister alone were paid $110 thousand for the promotion. They also say that they expect to receive a further $90 thousand for their efforts.
That is a huge amount of money for a single pump, but the newsletters are not the only ones trying to excite inexperienced investors. NANI themselves woke up early on Friday and they published a press release (again, just minutes after our article went online) saying that they are now partners with an educational institution that was formed and belongs to the Chinese government.
The increased mailing activity and the announcement resulted in a record-breaking daily trading volume (32 million shares changed hands when you have in mind that the average number hovers around 57 thousand) and a price increase of 21% compared to Thursday’s close. When we wrote about them on Friday, we guessed that the goal of the pump is to raise the share price above the $0.01 mark and so far, it seems to be working. For how long, though?
Well, we have covered NANI a few times in the past and if you read through our articles, you will see that we’re not terribly optimistic about their long-term success. At least not until they present us with a marketable product and a source of cash.
And here lies the biggest problem with NANI. They come on the news every now and then saying that they want to expand their business globally, or explaining that their educational program is absolutely brilliant, or, as in Friday’s case, announcing a partnership with the best of the best, but the fact remains that we have yet to see them generate revenues.
NANI entered the eLearning business about a year ago when they closed a merger with a company called Full East International Limited and according to the 8-K that they filed when the acquisition was completed, Full East have been working on the educational website and software since 2011. We’re no experts in this field, but we just feel that two years is more than enough for them to develop the whole platform and get it going. Apparently, it isn’t.
And speaking of the 8-K, we read in it, that NANI expect to incur research and development costs until the end of 2012 amounting to $175 thousand. When you check out the annual report for that period, however, you will see that NANI‘s total net loss amounts to just $60 thousand none of which was spent on R&D. This leads us to believe that not everything is going according to plan.
That’s not the only difference between the information contained in the two documents. The 8-K, for example, states that NANI plan to have the platform nationally available between 2013 and 2015. The deadline we find in the 10-K, however, is a bit different – between 2014 and 2016 and the fact that there are no full-time employees working for NANI at the moment (also disclosed in the 10-K) increases the possibility of these projections being pushed even further in time.
And while NANI are struggling, promoters of all shapes and sizes receive massive compensations to pump their shares with some horrific results. You only need to take a quick look through their stock performance between June last year and today, and you will be able to identify all the promotional campaigns that have been running for them. In case you can’t spot them, we have outlined the bigger ones and we see something of a pattern – the raised awareness always manages to give the price a little boost before a massive crash makes the ticker fall below the pre-pump values. Right now, we can’t see anything suggesting the Friday’s effort will result in something different which is why we would advise you to be extremely careful when trading NANI‘s stock.
