Health Sciences Group, Inc. (OTCMKTS:HESG) Rises, Shocks Investors with Problems
Sometimes, a stock can play out enough drama- and still remain extremely underpriced. Health Sciences Group, Inc. (OTCMKTS:HESG) is doing just that, spiking and yet remaining at triple-zero levels. On Friday, HESG added 75% to $0.0007, as buying volumes topped $1.07 million. Nearly two billion shares were mopped up on that day- still a small amount compared to the company’s whooping 18 billion shares, accumulated through dilutions. The free float for this company is above 13 billion shares. 
The story is already familiar- a failing company speaks of cannabis and rises like magic in a market hungry for new fast-moving stocks. What is strange is that HESG promised its foray into cannabis at the beginning of last year. Also, HESG promised last year it would update its status, and become a fully disclosing company. Unfortunately, there was little information since the last filing of financials on March 7th 2013. And the SEC filings contain only notes of delayed filing. Still, the information that is available points to the following picture:
- $358,000 total revenues for 2012
- $54,000 net loss
- $1,000 cash
- $134,000 total current assets
- $436,000 total current liabilities
Those data are from a self-reported OTC disclosure, and are unaudited. HESG even put down its total assets to above $1 million, but mostly ascribed to intangibles. As you can easily see, HESG has very thin resources to enter the cannabis sector in earnest, and very few reasons to justify a market cap of above $13 million.
Behind the initial enthusiasm, investors’ forums show an awareness that HESG is hiding many risks, including an investigation on a kickback scheme to encourage the buying of the company’s shares. The document states that between 2006 and 2009, the then-CEO of the company Thomas Gaffney paid kickbacks to a pension fund to encourage the buying of preferred shares. However, the deal was discovered by in fact posing undercover FBI agents as financial representatives.
And if that disaster is not enough, investors also note that HESG may be placed on a Depository Trust Company Chill to stall trading and avoid a deeper disaster. HESG just have to give enough concerns to traders- and as far as we have seen, this ticker is a perfect storm of problems.
With the development of the marijuana stock craze, the companies that appear are of lesser quality, and downright shady and dangerous like HESG. We advice you to avoid this ticker, which at this position may very well have worn out all its upward potential, and the problems are uncovered each day.
If you need risk exposure at the double-zero levels, Triton Distribution Systems, Inc. (OTCMKTS:TTDZ) is at $0.004, and has the potential to rise further, at least in theory. Others like Singlepoint, Inc. (OTCMKTS:SING) were lucky enough to be picked up by enthusiasm all the way up to the cents levels. But there is always the risk of deep corrections.
Unless you are perfectly certain you can afford a losing bet, it is best to avoid HESG, or sell as soon as possible, before the company sees further disaster.
