KonaRed Corp. (OTCBB:KRED) Digs Down Deeper

Just a few days ago, KonaRed Corp. (OTCBB:KRED) posed the question- when would it begin the fall. Now, after wiping out half the stock price, there is the question of when it would be a turn for a rebounce. KRED slid down another 16% on Monday, reaching $0.75, on $1.65 million selling volumes. KRED0402.png

KRED, not to be confused with larger Hawaiian brewers, is a Nevada incorporated entity, and only Hawaiian in name. The islands are known for having no bottling facilities of their own, thus it is natural that most local-sounding drinks would be exported elsewhere.WTER0402.png

On the whole, KRED remains a company with a longer-term potential in a constantly growing and rather active industry. KRED secured financing and claimed to expand its distribution network- but the real engine behind the recent growth was a pump campaign combining paper mailers, emails, a landing page and PR extras. All of this lasted until the abrupt ending, when a SeekingAlpha article put an end to the party and send the shares spiraling down with criticism.

Before securing $1 million in a private placement, KRED showed large deficits:

  • Zero cash
  • $3,968 total liabilities
  • Zero revenues
  • $27K loss for 2012

While there was talk of rising distribution and potential gains of the novelty drinks, we have not seen the bottom-line, and KRED looks like a company just starting. There are limited Amazon.com sales, and the reviews do not look artificially-placed, but all of this is far from adequate to prop up even the corrected market cap of $53 million.

Still, when the dust of the share dumping has settled, many previous pumps recover to achieve short-term gains, based on a bargain price. But in the case of downward pressure so strong, KRED should not be inspiring too big expectations. The ticker recalls the story of The Alkaline Water Co, Inc. (OTCBB:WTER), which also rose with promises of robust distribution of a novelty alkaline water. But once the pumping efforts dwindled, WTER deflated without any support, now leaning toward the 20-cent levels, down 80% from the promotional peak.

The one still holding out is Fresh Healthy Vending International, Inc. (OTCMKTS:VEND), which made its glossy brochure campaign in two phases. VEND just started to teeter when the new publicity created a fresh wave of buying and lifted the shares to $4.12- again with the question of when the next inevitable fallout would come.

All three companies mentioned will tout the benefits of healthy novel products- but proving those benefits through a bottom-line and a non-volatile stock is a whole different story. While KRED may be offering what looks like bargain opportunities, this stock is heavily promoted and as such almost certainly headed for rock-bottom, and a dead-cat bounce at best, so choose your investment accordingly and do your own due diligence.

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