AvWorks Aviation Corp. (OTCMKTS:SPLI) Falling Down Hard

AvWorks Aviation Corp. (OTCMKTS:SPLI) was off to a good start in recovering some of the ground it had lost over the last few sessions, when the news of the suspension of a “prominent” pot-stock company hit the web yesterday. The SEC’s act threw the whole marijuana stock market into chaos, which resulted in a sector wide crash that cost SPLI 31.25% of its market value.

SPLI share prices had risen significantly on April 9, perhaps not without reason. Once the company’s 8-K reporting its merger into an entity called Vapor Group Inc. hit the web, it became obvious that the merger had increased SPLI‘s chances of commercial success somewhat. Even after the merger, the company’s present financial state is barely praiseworthy, but it is still considerably better than it was before:

  • cash on hand – $48 thousand
  • current assets – $944 thousand
  • current liabilities – $1.1 million
  • annual revenues – $1.9 million
  • annual net income – $161 thousand

The numbers in the consolidated balance sheet had just began to push SPLI up, when the news of Growlife Inc. (OTCBB:PHOT)’s suspension by the SEC hit the wire and toppled the whole market. As a result during the ensuing disaster SPLI stock dropped all the way down to $0.126. But even though the drop was sudden and dramatic, it may not have been entirely unreasonable and purely hype-driven.

Even the most superficial research on the company reveals that SPLI currently has a market cap of $34.16 million – and that is after it crashed. Can this price be the realsitic market evaluation of a company that currently has more liabilities than the total of its assets and cash on hand? Is it any wonder that a company with such an overblown market value crashed as hard as it did, given the current volatile market state?

There is also the issue with SPLI‘s CEO to consider. Fervent SPLI supporters may turn a blind eye to this, but the fact remains that Mr. Dror Svorai’s past problems with the law is are not something a diligent investor should ignore.

Investors who want to increase, or at the very least hold onto their money, might want to think very long and very carefully before committing to the stock of cannabis-related companies. As yesterday’s crash clearly showed, the current marijuana stock market is more treacherous than ever.

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