Altn Fuels America (OTCMKTS:AFAI) Slips, Pump Picks up Speed

After the astonishing session on Thursday during which Altn Fuels America (OTCMKTS:AFAI) gained as much as 237%, it cooled off and finished the last day of the week in the red. At 9.26%, the losses weren’t too horrific and the trading volume was also significantly lower compared to the one registered during the surge. Still, with the new week dawning, many people are wondering where AFAI is heading next.

Unfortunately, predicting any sort of movement in the next few sessions will be extremely difficult. Here’s why.

For one, as we mentioned last week, AFAI announced their intentions of entering the marijuana business which secured the run in the right direction. As you probably know, the cannabis industry has been really hot since the beginning of 2014 but at the end of last week, we saw major pot stocks like Growlife Inc (OTCBB:PHOT), GreenGro Technologies, Inc. (OTCMKTS:GRNH), and Cannabis Science Inc (OTCMKTS:CBIS) display some significant corrections.

AFAI‘s performance is bound to be affected (at least to some extent) by the general sentiment towards the marijuana industry. If, for some reason, the enthusiasm dies down, the ticker will most likely plunge towards the lower end of the charts. Which, by the way, happened to most of the marijuana stocks last year when another wave of rumors around the relaxation of laws sent more than just a few tickers on a run. Unfortunately, the excitement subsided at one point and most of the stocks took a heavy beating.

In any case, the industry is still growing and there are still a lot of unknowns around it. We’ll see if the current hype around the sector proves to be more long-lasting this time, but while we’re in the process of finding out, there are a couple of things around AFAI that need careful consideration.

The first one is the company’s devastating financial situation. As we mentioned last week, the latest balance sheet shows that as of September 30, they had just $166 to work with and more than $1.2 million in current liabilities. These sort of financials put enormous question marks around the company’s future success. While there’s been no shortage of optimistic press releases over the last few months, they have yet to announce any source of fresh financing that could help them weather the difficulties.

This, by the way, is a fact that is conveniently left out from the report put together by Wall Street Profit Search (WSPS) – the entity that’s been hired to carry out an awareness campaign on AFAI.

As we noted on Friday, the promotional budget amounts to $150 thousand which, though not as substantial as the one set aside for Tiger Oil and Energy Inc (OTCMKTS:TGRO)’s campaign, is still quite high. Speaking of which, it seems that it’s being put to use.

We read on WSPS’ website that they’re preparing to put their report in print and distribute it over the snail mail. This could potentially bring in a few new investors but it could also lead to some disproportionate chart movements for the company that is just entering the scorching hot marijuana industry… with $166 in the bank.

Here’s another thing to consider. AFAI‘s current Chief Administrative Officer, David Fater and the former CFO, Thomas Bohannon have been involved with another OTC-listed enterprise – Vicor Technologies Inc (OTCMKTS:VCRT). VCRT is a penny stock with a market cap of just $113 thousand and no official filings since April 2012. In their latest 10-Q we read that Mr. Fater had to deal with some legal complaints alleging him of, among other things, “unjust enrichment”. The lawsuit was later dismissed and the actions might not have a direct effect on AFAI‘s stock and business performance. Still, keeping this piece of history in mind might not be such a bad call.