Borislav Tonev

Reliabrand Inc (OTCMKTS:RLIA) is in Trouble

by Borislav Tonev October 9, 2015

Richard Ellis, or The Wolf of Penny Stocks as he likes to call himself, has only been in the penny stock promotional world for a few weeks, but thanks to an aggressive marketing campaign that took place before he actually started pumping OTC stocks, he managed to gather quite a following. Yesterday, he announced that Reliabrand Inc (OTCMKTS:RLIA, RLIA message board) is his latest pick.

Mr. Ellis was certainly hoping that it would work. His previous pump, the one for Entertainment Arts (OTCMKTS:EARI) did bring him $50 thousand according to the disclaimer, but it was such a massive failure that it landed a blow on his reputation. Instead of going up, EARI stumbled and lost about 54% of its value in a matter of a single week.

At first glance, the promotion for RLIA, though free, has worked much better. In fact, more than 22 million shares changed hands yesterday which turned RLIA into one of the most heavily traded stocks on the OTC Markets. A significant gap up of $0.0054 was recorded at the open after which RLIA ran to an intraday peak of a truly amazing $0.0268 per share. It eventually settled down a bit and it came to a stop at $0.016, but this is still a massive 435% above the value at the end of Wednesday's session and it's also RLIA's first close out of sub-penny land in over four months.

By the looks of things, Mr. Ellis' pump for RLIA has been much more successful than the one for EARI. But does that necessarily mean that you should jump in?

The regulatory organs don't seem particularly impressed with the promotion. The SEC is as quiet as usual when it comes to these sort of activities, but the Securities Commission in British Columbia is a bit more active. Mere hours after the closing bell, the Canadian province placed a Cease Trade order on the stock. The OTC Markets' reaction was just as quick which means that the company profile is now branded with a Caveat Emptor sign.

Clearly, there's no shortage of people who reckon that you should proceed with caution and we're not inclined to disagree. After all, the pumpers' presence is always bound to make things more dangerous than they should be and you mustn't forget that further, more serious actions from the regulators are not impossible.

As for the company itself, it is trying to market its supposedly ground-breaking baby bottles. The latest 10-Q is hardly pretty, though:

  • cash: $8,628
  • current assets: $786,581
  • current liabilities: $599,141
  • quarterly revenues: $43,461
  • quarterly net loss: $144,551

Surprisingly or not, there's no toxic debt which is definitely a good thing. There is a rather massive drop (more than 81% on a quarter-over-quarter basis) in the revenues, however. The management team said that this is due to a change in the manufacturer and they promised that this particular problem will be sorted in the very near future.

Hopefully, they will turn out to be right and hopefully, they will also manage to do something to keep the pumpers away. This will give potential investors some much-needed peace of mind.

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