Rapid Fire Marketing Inc (PINK:RFMK
, RFMK message board
) have been flying through the roof during the past couple of days, which is not very uncommon when it comes to penny stocks. On many occasions, however, these price jumps are solely due to either forward-looking statements that don't necessarily correspond to the truth, or paid promotions. RFMK, made a huge leap with 45% gains on Tuesday and a further 30% yesterday and we just had to see if this will be a truly long-term run or if they will crash hard very soon, leaving a lot of disappointed investors behind.
The hype is somewhat understandable since RFMK are one among the many companies in Pennyland dealing with medical marijuana, one of the hottest sectors around at the moment. They have also added a twist - instead of providing systems that should help you grow your own weed, or plainly selling it to you, they are offering a kind of electronic cigarette that supposedly vaporizes the healthy ingredients in hemp oil and give you all the benefits without the nasty smoke damaging your health. They also say that this is supposed to be 100% legal all over the world.
If all these statements are true, cannabis-lovers from every corner of the globe should be dreaming of getting their hands on one of these magical devices. But do they? To find out, we opened RFMK's latest financial statement, and we can see that the sales aren't really impressive. The same goes to the rest of the figures:
- current assets: $24 thousand in cash
- current liabilities: $0
- revenues for the first nine months of 2012: $26 thousand
- net loss for the first nine months of 2012: $431 thousand
- accumulated deficit: $9 million
As you can see, marijuana enthusiasts are not that impressed with RFMK's products, but maybe they just haven't heard of them. To boost brand awareness, RFMK are planning on launching an affiliate program that, their CEO, Thomas Allinder, says, will bring a lot more revenue. We're a little reluctant to believe Mr. Allinder. He is supposed to be an investor relations specialists and he has been involved with a number of small cap companies throughout the years. He had a website where he listed his opinions and advised traders where their money will be best spent, which basically means that he was a promoter. A few years ago he spoke some really nice words about a company called Spongetech Delivery Systems, Inc. (PINK:SPNGQ). A few months later, however, there was a big scandal, SPNG's CEO and CFO were charged with performing a "pump-and-dump" scheme, and even the FBI were involved in the investigation. Just for the record, although Mr. Allinder refuses to acknowledge any of the accusations that have been thrown at him throughout the Internet forums, the website which he ran and through which he praised SGNP seems to be down at the moment.
And if we were shareholders of RFMK, we wouldn't be extremely happy with Mr. Allinder's management, either. He has been crushing investors with astronomical dilution for quite a while and during 2012 alone more than 439 million new shares were issued. According to the financial report, there there are also more than 12 million series A preferred shares convertible at any time into common stock at a ratio of 30:1.
Another thing that makes us dubious about RFMK's success is the fact that their administrative office seems to be located in a small residential house as can be seen from the picture on the right. We weren't expecting to see big factory since the financial reports say that the electronic smoking devices are produced in Hong Kong (which probably means that shipping costs are enormous), but a two-story residential home is not our idea of a corporate office, either.