Nuvilex Inc (OTCMKTS:NVLX
, NVLX message board
) managed to finish last week on an extremely positive note. The ticker closed both Thursday's and Friday's session with more than 17% in daily gains and managed to rack up a cumulative dollar volume for the two days of more than $6 million. The ticker currently stands at $0.182 per share which is precariously close to the 52-week high of $0.22 registered in May 2013. But is this a surprise?
Not really. A press release hit the wire on Friday according to which the Director and CTO of Austrianova (Nuvilex's partners) is about to take part in The Phacilitate Cell & Gene Therapy Forum - an international event that should bring a lot of exposure to the emerging biotech enterprise.
A positive piece of news, but unfortunately, the surge that the stock has been experiencing isn't solely due to the interesting developments around the company. If you've been following our articles closely, you know that NVLX has been the target of a rather big promotional campaign for months now and it seems that the pumpers haven't yet given up on the ticker.
Goldman Small Cap Research and Stock Market Media Group are still pumping out articles every other day, saying how this or that event is going to turn NVLX into a multi-million dollar company. Last week, they were joined by a new outfit that goes by the name of WealthMakers. They published a report which contains a $1.90 price target and no details around the question of compensation.
The newsletters, on the other hand, are pretty clear about the money they receive for touting NVLX. According to our database, $30 thousand has been spent on pumping the ticker since the beginning of the month. We have so far received fifteen alerts and they keep coming in which means that we might expect some interesting sessions in the days to come. Does this mean that NVLX will continue to go up?
Even without the pumpers, the enthusiasm around the medical and recreational marijuana industries is plentiful and other pot stocks like Cannabis Science, Inc. (OTCMKTS:CBIS) have shown us that it's sufficient enough to propel tickers towards the higher end of the charts. Unfortunately, sooner or later, the enthusiasm will subside and then the marijuana companies will need to survive through their business operations. That's where things don't look particularly well for NVLX.
The company's latest financial report shows that during the six months ended October 31, they have managed to reduce their current liabilities substantially, but it also reveals that the current assets have shrunk by almost 75% which means that three months ago, they had less than $400 thousand in the bank and a negative working capital of almost $500 thousand. At the same time, there's still no signs of revenues and, at nearly $5.7 million, the quarterly net loss is quite substantial.
The dilution is also severe. Between July 29, 2013 and December 13, 2013, NVLX issued more than 83 million shares, 57 million of which were printed as a conversion of preferred stock. The people who currently hold the newly issued shares could decide to take advantage of NVLX's current valuation and if that happens, the ticker will most likely take a tumble.
That's why, carefully considering the risks of a potential investment is absolutely crucial.
Konared Corp (OTCBB:KRED) is another promoted OTC stock and although it's not related to the marijuana industry, it too seems to be on the run. KRED managed to finish Friday's session around 8% above its previous close while the dollar volume stands at well over $3 million. The eight consecutive green sessions and the hard mailer campaign that seems to be flying around, however, suggests that the ticker might be in for a steep dive very soon.