Konared Corp (OTCBB:KRED) Gets a Multi-Million Dollar Pump
When you think of coffee, you probably associate it with the magical black liquid that helps millions of people around the world go to work and be productive every morning. The people currently at the helm of Konared Corp (OTCBB:KRED), however, have found another use for it.
Apparently, some years ago they discovered that the fruit of the coffee plant (which has been discarded as a by-product for decades) is actually a really great antioxidant. They signed some contracts, came up with a couple of beverages based on the fruit, and started selling them.
Currently, KRED‘s products are available at a number of retail locations in Hawaii and California. They can also be bought online and, having gone through a couple of reviews, we can see that the general public seems to like them. The problem is, while the antioxidant drinks have certainly made an impact on the market, they have also hit the company’s financial situation hard.
The third quarter of 2013 ended with around $174 thousand in revenues – a whopping 68% decrease year-over-year. There’s also a $275 thousand net loss and a working capital deficit of more than $740 thousand.
That’s why, the management team decided to take the company public. They merged with a penny stock called TeamUpSport Inc, changed the name, and officially launched KonaRed’s stock on the OTC Markets in October.
At first, the ticker didn’t seem to hold too much appeal for investors. Volumes were tiny and the price movement was nothing to write home about. There were a couple of optimistic press releases which should have woken traders up but, apparently, they weren’t effective enough. Neither was the fact that, unlike a large portion of the penny stocks out there, KRED is actually an operating and revenue generating entity.
Over the last couple of weeks, however, we saw some movement. The volumes started to pick up and the price inched its way up to yesterday’s close of $0.872. The movement isn’t explosive, but it seems consistent which could suggest that investors are finally starting to pay attention to KRED.
Unfortunately, this is due to a $2.3 million pump campaign.
You can see from our database that The Stock Junction, Stock Palooza, and Penny Stocks Forever have sent a couple of emails. There are at least two landing pages available on the internet, and a video advertisement uploaded on a YouTube channel called BeverageInvestor.com. But what will happen to the stock?
As most of you probably know, these campaigns often go badly wrong for the people who fall for the enthusiasm and optimism coming out of the promotional materials. Some of you could argue that, unlike KRED, the majority of penny stocks who fall victim to the big campaigns are enterprises with no real products and revenues. This is indeed the case, but we have also seen some operating companies perform badly under the influence of the paid pumps.
Alkaline Water Company Inc (OTCBB:WTER) (which, by the way, was also promoted by the Beverage Investor channel) is a prime example. You can see that, although their products are available on the market, their stock has wiped out around 78% of its value since the peak of the pump.
There’s another red flag. Back when the people who stood behind TeamUpSport Inc were preparing the company to become public, they needed to raise some capital. According to the 10-Q covering the period ended February 29, 2012, they did it by issuing 1.9 million shares in exchange for just $38 thousand. The shares were valued at $0.02 a pop and, when taking the effects of the recent stock split into consideration, their total number should exceed 25 million. They should also be a part of KRED‘s float and could present a massive profit opportunity for the thirty-one unnamed investors who got them back in 2011.