IPOWorld (OTCMKTS:IPOW) is Fraught with Danger
Would you just look at that chart! IPOWorld (OTCMKTS:IPOW) hasn’t logged a red session for over a week and during that period it has managed to run from $1.08 all the way to $2.10 per share. Trading is becoming more and more intense and yesterday, the dollar volume was clocked up at more than $170 thousand. Basically, the stock is performing brilliantly. And that’s got us a bit worried.
Yesterday’s 7% gain pushed IPOW‘s market cap to just under $58 million. That, in the grand scheme of things doesn’t sound like much, but when you consider what stands behind it, you’ll see that it could be a bit of a stretch.
The latest 10-Q covers the second calendar quarter of 2015 and it sports the following figures:
- total assets: $49 thousand in cash
- current liabilities: $56 thousand
- NO revenue since inception
- quarterly net loss: $115 thousand
In light of these figures, yesterday’s press release sounds a touch too optimistic. It says that the company is in negotiations for the lease and development of 3 acres of land located in California. The management team, led by Edward Heckerson, also stated that they will be focusing on intellectual property and patent acquisition within their marijuana business. With less than $50 thousand in the bank, that won’t be very easy.
Still, the more forward-looking among you will probably note that the figures outlined above are now quite old and that things could be a bit different at the moment. Indeed, they could be. That doesn’t make the stock any less dangerous, though.
The recent surge in the right direction hasn’t been caused by a press release, by an interesting business plan, or by hope that the financials have improved. It’s all due to a $600 thousand landing page that is distributed with the help of some emails. The outfit in charge of the pump is called Rising Stock Advisor and according to its editor whose name is David Moore, IPOW will become “The Amazon of Legal Marijuana”. As always, we’ll leave it up to you to decide how realistic this claim is.
While you’re pondering, we’d like to focus on the budget. $600 thousand is a rather huge lump of money and the fact that someone has invested it means that that someone most likely wants to get a return on it. The fine print doesn’t say who the paying party is, but this is not really relevant because more often than not, the name of the entity providing the money doesn’t really lead you to the people who actually profit from paid pumps. The SEC filings, however, do that sometimes.
Back in the days, IPOW was called General Cleaning & Maintenance and when it was trying to go public, some of its then-existing shareholders sold to the public 4 million shares of common stock at a price of $0.01 per share. In addition to this, the company itself sold 1 million shares at the same price. Thanks to the paid pump and the overly inflated market cap, the people who acquired the aforementioned stock several years ago now stand to make a considerable amount of very quick and very easy money. And, as the more experienced among you know all too well, making quick and easy money is in the root of every single one of those treacherous penny stock promotions.
