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Early in the morning yesterday Red Giant Entertainment (OTCMKTS:REDG<\/a>) released a new shareholder update. The nearly two hour long video didn’t go unnoticed by by the market and investors rushed towards the stock – by the end of the trading day more than 418 million shares had been exchanged. The buying pressure pushed the stock 33% up. Although on its own the outcome of the session is impressive it may be for the best to remember that REDG<\/a> <\/strong>are sitting close to the very bottom of the chart and moving from $0.0003 to a close at $0.0004 is not that reassuring.<\/p>\n In the video REDG<\/a> <\/strong>talked about their big plans for the future with the most recent major event being the launch of the GIANT-SIZE line scheduled for November 4. The problem is that the company has been saying similarly encouraging things for years now without showing any meaningful results. In fact REDG<\/a>’s <\/strong>financial state is nothing short of atrocious. The latest financial report covers the quarter ending May 31 and it inspires little confidence:<\/p>\n • $11,679 cash For the nine month period since the start of REDG<\/a>’s <\/strong>current fiscal year the incurred net loss stands at $1.2 million. It is obvious that the company is in a desperate need of new funds. And this leads us to the biggest red flag around the stock – the crushing dilution.<\/p>\n In the past REDG<\/a><\/strong> had to take on a significant amount of convertible debt and as a result the outstanding shares have been growing out of control. As we said in our previous article REDG<\/a>’s<\/strong> O\/S count ballooned from 434 million in early 2013 to just below 3 BILLION in early 2015. Recently, however, the conversions became even more intense as the two 8-K forms filed on July 30 and August 6 clearly show. According to them between June 22 and July 1 a total of 206 million shares saw the light of day<\/strong> while in just 10 days, between July 21 and July 31, the company issued another 395 million shares<\/strong>. In yesterday’s update the company stated that the dilution should be coming to an end soon but the damage has already been done.<\/p>\n
• $17,959 total current assets
• $4.5 million total liabilities
• $1,879 revenues
• $117 thousand loss from operations<\/p>\n