Borislav Tonev

Legacy Ventures International Inc (OTCBB:LGYV) Taking On More Water

by Borislav Tonev February 4, 2016

Ever since Legacy Ventures International Inc (OTCBB:LGYV, LGYV message board) completed its reverse merger with RM Fresh Brands, the people who are currently at the helm have been hard at work convincing us that the closing of the deal (which took place at the end of September) will mark a new, more successful chapter for the company.

They have published pictures in which celebrities drink water out of a cardboard box (the main product offered by LGYV), they have announced distribution deals, and they have appointed some new Directors.

Yet, investors don't seem to be especially impressed. In fact, the ticker has only been actively traded for a couple of months and although it reached a high of over $2 per share at one point in December, it has since then lost quite a huge chunk of its value. Over the last two sessions, the drop has been particularly steep.

A 17% loss on Tuesday was followed by another crash yesterday during which LGYV wiped out almost a third of its market cap. Currently it's sitting at a hair over $0.50 per share. Time to find out why the stock is refusing to go up.

It could have something to do with the company's financials. There are indeed pictures of celebrities like Hilary Duff and Anne Hathaway drinking the boxed water, but the fact of the matter is, RM Fresh Brands is simply a distributor and its business doesn't seem to be booming. Here's what LGYV's subsidiary recorded three months before it got acquired:

  • cash: $61
  • current assets: $92 thousand
  • current liabilities: $85 thousand
  • quarterly revenues: $92 thousand
  • quarterly net income: $9 thousand

LGYV's latest 10-Q is even more ugly. The financial statement is supposed to include the results of RM Fresh Brands for the third calendar quarter of last year, and yet, it shows no revenues whatsoever.

The disappointing figures are probably exerting some pressure on the stock, but they might not be the only thing pushing it down.

Regular visitors of Hotstocked know that we started covering LGYV quite a while ago and they also know that there's a worrying amount of discounted shares flying around. We're talking about the 11.2 million shares (as adjusted for the 7 for 1 split from last year) that were sold for just $16 thousand back in 2014. Coincidentally or not, according to the latest 10-Q, the float amounts to... yes, you guessed it, 11.2 million shares.

It might grow some more, though. After the reverse merger, RM Fresh Brands' former shareholders collectively received about 7% of LGYV's outstanding stock and recently, the company filed an S-1 form in order to register those 7% for resale.

An increasing number of shares that could hit the open market is probably the last thing LGYV needs at the moment.

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