Valentine Beauty Inc (OTCMKTS:VLBI) Gets a Black Eye

It seems that, without the help of the paid pumpers, Valentine Beauty Inc (OTCMKTS:VLBI) is simply unable to draw attention to itself. Back in December 2013, the company changed its name and ticker symbol. A reverse split was made, a new business plan was put in place, and some new people took the helm. Investors couldn’t care less.

Trading remained non-existent over the next few months and it seemed like VLBI was going to be just one of the many illiquid stocks on the OTC Markets. A couple of weeks ago, however, Leigh Valentine, the company CEO, was interviewed by a website called CEORoadshow and she said that she is extremely excited about her company and its future.

This was followed by a small-scale promotion carried out by 007 Stock Chat and a few smaller outfits. The ticker finally saw some volume, but unfortunately, trading wasn’t particularly intense and the stock performance was downright disappointing. VLBI managed to slash more than 50% in a single day and dropped from $0.16 to just $0.074.

Yesterday, a third party called Rodriguez Concrete LLC decided to give the ticker a chance to redeem itself. They paid $30 thousand for a pump which was carried out by OTCRockstar and its affiliated newsletters. The pumpers sent out a total of twelve emails and their touting resulted in a dollar volume of around $444 thousand. Unfortunately, the stock failed to impress once again. VLBI opened the day with a rather big gap up and stayed in the green for a while. Around 2PM, however, it plummeted and finished the session at just $0.0371 per share which is 19% below its previous close.

People who were quick with their trades probably managed to make some profits during the morning run, but those who got a bit carried away are most likely looking at some painful losses right now. They’re probably wondering if the ticker will be able to recover.

VLBI issued a press release yesterday (which, coincidentally or not, hit the wire just as the emails were flying around) and said that they’re making some improvements to their flagship Non-Surgical Face Lift product. They also informed us that over the past twelve years, they have logged more than $250 million in revenues.

The latest financial report, however, shows that during the first quarter of 2014, sales have been somewhat slow. There are some other problems as well:

• cash: $15 thousand
• current assets: $94 thousand
• current liabilities: $460 thousand
• quarterly revenues: $61 thousand
• quarterly net loss: $54 thousand

While investors are waiting for some improvements in the future financial statements, they need to consider one more thing that could severely affect the stock performance.

Page 20 of the latest report tells us that back in August 2012, the company issued a $55 thousand note which can be converted into common stock at a rate of $0.001 per share. If the note holders take advantage of the discount and if the converted shares hit the open market, VLBI could be in for a crash that is much scarier than the one witnessed yesterday. How bad could it be?

We reckon that Medient Studios Inc (OTCMKTS:MDNT)’s chart shows pretty definitively that lots of promotions and a huge amount of newly issued shares rarely make for a good combination. That’s why, being diligent and considering all the risks is absolutely essential.