Rainbow Coral Corp (OTCMKTS:RBCC) Marches On

A little over two years ago, Rainbow Coral Corp (OTCMKTS:RBCC) was traded at just under $0.40 per share. Yesterday, after logging a third consecutive green session, it stopped at $3.50. Impressed?

Let’s not get carried away. RBCC‘s rather lofty price would have been impossible without the 1 for 100 reverse split that was effectuated at the end of May. In other words, the stock hasn’t really given long-term shareholders the chance to profit. Nevertheless, the ticker is climbing at the moment and it’s up to us to check out the company and see if the members of the management team have done enough to justify a price of over $3 per share.

They seem to be pretty busy when it comes to the press releases. No less than three announcements have been made since the beginning of the month, with the latest one hitting the wire earlier today. With it, RBCC said that they are “ready to sign” a letter of intent with an unnamed Canadian medical group that specializes in the treatment of alcohol addiction. The press release isn’t too specific on what the partnership will involve, but it leaves you with the impression that the deal will be big.

So, the people behind RBCC are doing a good job of drawing investors’ attention and giving the stock a push in the right direction. If the ticker is to support its market cap, however, the company will need to have some credibility and unfortunately, that’s where things start to go wrong for RBCC.

For one, they’re using a virtual office which, as is often the case, is also “occupied” by a few other OTC enterprises like US Tungsten Corp (OTCMKTS:USTU), Solo International (OTCMKTS:SLIO), and Westpoint Energy Inc (OTCBB:WEYIE).

The wording of their press releases is also rather interesting. They’ve been trying to convince investors that Naltrexone is their “flagship drug” for quite some time, but, as we mentioned yesterday, they have not been involved in its development and they haven’t generated even a dime in revenues from it. The sales in the latest annual report come from a fish store in Florida which, curiously enough, isn’t mentioned in the press releases at all. To top it all off, the fish store in question is far from profitable and RBCC‘s balance sheet is in an absolutely atrocious state.

The purpose of the management team of every single public company is to drive shareholder value and it’s fair to say that the people steering RBCC have not really done enough on that front. In fact, some of their actions are downright threatening to the unlucky investors who have their money locked in the stock.

As we also mentioned yesterday, the management team didn’t renegotiate the terms of the convertible notes when they effected the reverse split which means that 86% of the currently issued and outstanding shares saw the light of day at just $0.02 apiece. Make sure you bear this in mind when you reach for your wallet.

About twenty-five minutes after the opening bell, RBCC is sitting at $3.90 per share (another 11% in the green).