TRUE DRINKS HOLDINGS (OTCMKTS:TRUU) Spikes Up The Chart
Since the start of June the stock of TRUE DRINKS HOLDINGS (OTCMKTS:TRUU) has registered only a handful of sessions with traded volume above 100 thousand shares. Yesterday, however, the company saw over 1 million of its shares changing hands. Thanks to a last minute surge the stock was also capable of closing the day with a gain of 20% at $0.24. The last time TRUU traded at such price ranges was way back in early-January.
Yesterday’s performance may have been encouraging but unfortunately it wasn’t supported by anything immediately obvious. TRUU haven’t issued a new PR for over a month and we can’t say that investor message boards have been buzzing with interest towards the company.
Admittedly TRUU have quite a lot of positive aspects. The company has a real product – the zero-sugar, vitamin-enhanced AquaBall Naturally Flavored Water, and they are generating respectable revenues by pennystock standards. Unfortunately, these facts are not enough to offset the serious red flags that surround the company.
Despite their efforts TRUU’s financials still leave a lot to be desired – the company finished the first quarter of 2015 with:
• $48,803 cash
• $2.7 million total current assets
• $5 million total current liabilities
• $765 thousand sales
• $2.2 million net loss
Compared to the same period last year TRUU’s revenues increased by 19% while the net loss decreased from $3.6 million to the currently reported amount of $2.2 million. The company completed two rounds of financing raising $4.3 million in February and $2.7 million in March. A significant portion of the funds was used to repay some of the outstanding debt and as the report showed the cash reserves at the end of the quarter were less than $50 thousand. TRUU managed to boost their balance sheet by another $1 million on May 29 by selling 100 thousand Series C preferred convertible shares but that amount won’t last for long.
Investors should also keep in mind that recently the authorized shares were increased from 120 million to 200 million shares. With 53.6 million outstanding shares as of May 14 this could mean that quite a lot of shares might be issued in the future.
TRUU are trying to move forward with their business and the growing revenues are definitely an encouraging sign. At the end of May the company added Jetro Cash and Carry to its distribution partners. For now though the significant losses and the reliance on external sources of capital remain extremely serious red flags that shouldn’t be ignored. Doing your own due diligence should precede any trades involving the stock.
