High Performance (OTCMKTS:TBEV) Spikes Up Despite the Apocalyptic Dilution
Trusting your money with High Performance (OTCMKTS:TBEV) might not be the easiest thing in the world. After all, when you are planning on investing in an OTC company, you might be worried about credibility. The fact that five years after its incorporation, TBEV is still working out of a residential house is not helping on that front.
When we say “working”… the company had a license agreement with Throwdown Industries LLC for the development and marketing of a line of beverages under the Throwdown brand. Some endorsement contracts with sports celebrities were signed and a lot of investors were drawn in by the big names. Unfortunately, TBEV failed to get the Throwdown drinks off the ground and in January, the license agreement was terminated.
Things were not looking good from the very beginning, but that didn’t stop the management team from setting optimistic deadlines and then failing to meet them. The latest 10-Q, for example says that some flavors of the sports beverages were supposed to be launched “during the first calendar quarter of 2015”. We’re now well into Q2, but the drinks are still not out.
This might have something to do with the company’s financial situation. The aforementioned 10-Q tells us that TBEV wasn’t in a particularly healthy shape at the end of January. Here are the figures:
- total assets: $397 thousand in cash
- current liabilities: $4.7 million
- NO quarterly revenues
- quarterly net loss: $1.7 million
There’s no shortage of red flags, you have to agree, but all of them pale into insignificance compared to TBEV‘s biggest problem – dilution.
The quarterly report covering the period ended October 31, 2014 tells us that in a matter of just three months, the company issued exactly 1,311,106,730 shares in order to satisfy $210,164 worth of notes which brings the average conversion rate down to just over $0.0001 per share. In November, a further 131 million shares saw the light of day at the same price.
These figures, it must be said, are somewhat irrelevant at the moment. In February, TBEV executed a 1 for 10 reverse split in an attempt to tidy up the share structure. Unfortunately, immediately after it, the stock started falling hard which means that retail shareholders saw their investments all but disappear.
Nevertheless, some of them have not given up hope. Although the agreement with Throwdown failed to bear any fruit, TBEV decided that they will develop and market beverages under their own brand. Some negotiations with manufacturers and packagers were carried out and on May 12, the company announced that production should start on June 29. Investors were quick to react.
A volume spike helped the ticker reach $0.0003 per share on the day of the announcement. It them slid back down to $0.0002 and spent the next few days doing nothing, but yesterday, it jumped up again and closed the session with a price of $0.0004 and a dollar volume of about $260 thousand.
Apparently, people believe that the stock will not disappoint them once again. They also reckon that TBEV will manage to meet their deadlines for a change. Some of them seem to be overlooking the elephant in the room, though.
At the end of January, TBEV still had more than $2.3 million worth of debt convertible into common stock at either a hefty discount, or a fixed price of $0.0001 per share. The report for the quarter ended April 30 won’t be out for another few weeks which means that we can’t say anything with absolute certainty. Chances are, however, that some of the notes have already been converted. Yesterday, in a matter of six and a half hours, investors traded 853 million shares – more than four times the last reported O/S count.
Those of you who have been with the company for long enough know how much pressure the horrendous dilution can put on the stock. The rest should probably tread carefully.
