Apart from the unusually high trading volume, it was an ordinary day on the market for Vu1 Corporation (OTC:VUOC) stock yesterday. A slight decrease in price was seen, but it was no different than the common trend that started in the beginning of the year. Since then the shares have lost $0.10 of their price, closing the last session at $0.50.vuoc-13.01.11.png
Now, the main line of business for Vu1 is the development of mercury-free, light-emitting products intended as an alternative to the incandescent, halogen, fluorescent and LED lights. As a company in a development stage, there are no revenues yet. Last year, especially during the second two quarters, announcements were made about contracts for the company to deliver products to retailers and distributors. This naturally led to intense trading activity and increase in the stock price. A short-lived one though, as confidence in investors is yet to be gained by Vu1.
Further to the above, the last 10-Q report is also not a base for optimistic notions. Three indicators are of particular importance:
  • a net loss of $3.1 million for the nine months ended Sept. 2010
  • negative cash flows from operations of $2.5 million for the same period
  • accumulated deficit of $68.9 million
Major concern for the company is the means to find the additional financing needed to continue its operations. Yet, it has been so since its inception and so far efforts in this direction turned out successful. Another problem was the lawsuit against one of the ex-employees that the company got engaged in. It sparkled vivid discussions over the Internet, and obviously also affected the stock markets yesterday in terms of volume traded and price decline.
3vu1_logo.jpg
All in all, the future of the company looks uncertain, but by no means doomed. Once investors see first realized sales of its products, coupled with secured financing for its operations this year, the downward trend could soon be reversed. Whether the company can achieve that is an entirely different question.