Hangover Joe’s Holding Corp (OTCMKTS:HJOE) Wakes Up With a Headache
Sometimes, the chart says it all, and Hangover Joe’s Holding Corp (OTCMKTS:HJOE)’s case might be a perfect example. About twelve months ago, the stock was hovering around the $0.02 per share mark. Then, thanks to some positive press releases, it blasted off to a 52-week high of $0.09 in July 2014, but it slowly lost the will to live and it crumbled down. Last week, HJOE was barely handing on to $0.0002 per share.
Now, it’s waking up and it seems determined to leave the embarrassing memories behind. Over the last two sessions, it has recorded some impressive volumes and after a 163% jump yesterday, it reached a close of $0.001 per share for the first time since February.
Apparently, investors have forgotten the gut rot feeling of losing money and they are ready to party again. The same can be said about the company, by the way. HJOE announced a week ago that their Git-R-Done Energy Shots are about to be featured in a TV series called Food Factory USA. A few days later, they said through their social media profiles that some deals are in the works and that people should be expecting a press release within the next week or so. They also posted a link to a Korean commercial for the hangover shots.
Thanks to all of this, some people are now saying that getting out of the sub-penny levels will be a breeze. We get the sense, however, that a rather large portion of the stock supporters haven’t looked at HJOE‘s latest financial report. If they do decide to open it, they’ll find the following figures:
- cash: $48 thousand
- current assets: $105 thousand
- current liabilities: $2.8 million
- quarterly revenues: $48 thousand
- quarterly net loss: $592 thousand
Observant investors will point out that these are the figures for the third quarter of last year and they’ll say that the financials above are now more than seven months old. They’d be right. Sadly, we don’t have anything more recent to work with.
The members of the management team are apparently too busy uploading pictures to various social networking websites and they can’t find the time to publish the 2014 10-K. At the end of March, they said that it should be ready within the next fifteen days, but more than a month later, the report is still not out.
Investing in a company with no up-to-date financials is dangerous enough. When you put in the questions around the share structure, things get even more risky. Especially in HJOE‘s case.
The company has quite a history of financing its operations with the issuance of convertible notes and unfortunately, the chart at the beginning of the article shows that the stock is bearing all the consequences. The latest 10-Q says that between June and November 2014, HJOE converted about $450 thousand worth of debt into ‘approximately‘ 180 million shares. This brings the average conversion rate down to just $0.0025 per share and as we mentioned already, during the same period, HJOE was flying much higher than that.
The exuberant stock printing brought the O/S count to 331 million on November 12, but the dilution wasn’t about to stop there. The number of authorized shares was increased to 5 billion in February and some more stock was issued. Unfortunately, the missing annual report means that we can’t give you much in terms of details. We do know, however, that about a month and a half ago, there were more than 1.7 billion shares issued and outstanding.
In the interest of fairness, we should point out that in a press release from March HJOE promised that they’re doing everything they can to settle the notes in the best possible way and apparently, a lot of investors reckon that the company can weather the storm after all. You mustn’t underestimate the destructive potential of hundreds of millions (and possibly billions) of discounted shares, though.
