Propanc Health Group Corp (OTCMKTS:PPCH) Bogs Further Down

Certain people have been hard at work recently. They work for entities like Wealthy Venture Capitalist, they have received quite a lot of cash for their articles, and in exchange, they are saying that smart investors should consider pouring their money into Propanc Health Group Corp (OTCMKTS:PPCH).

The performance suggests that either there aren’t many smart investors out there, or that they simply aren’t listening. Over the last two weeks, the ticker logged only a couple of green sessions and on September 22, it dropped below the $0.03 mark for the first time in almost five months. Yesterday, it wiped out another tenth of its market cap and it also logged an intraday low of just $0.0203 which goes to show that it might soon find itself below the $0.02 mark.

If that happens, the people who were spending money on the stock when it was traded at more than $0.12 would be looking at losses of about 85%. That would be disastrous. But why is PPCH‘s performance so atrocious?

Well, the company announced a few months ago, that it wants to be listed on one of the national exchanges, but its behavior doesn’t suggest that it really deserves to be on the big boards. Yesterday, for example, the management team told us that the annual report for the period ended June 30 will not be out on time because they have failed to complete it.

The most recent set of figures investors have to work with are now six months old and they don’t look like much:

• cash: $168 thousand
• current assets: $309 thousand
• current liabilities: $2.2 million
• NO revenue
• quarterly net loss: $454 thousand

The financials are quite underwhelming and this has been the case for quite a while, which, is somewhat understandable considering the lack of revenues. This means that the people at PPCH‘s helm have been forced to choose a way of funding the operations, at least until the money starts flowing. They didn’t pick the most shareholder-friendly source of financing.

As we mentioned in our previous articles, numerous convertible notes were picked up over the years and they were later converted into shares which means that about 40% of the O/S count reported in May consisted of stock issued at an average rate of $0.002 apiece.

With the massive volumes recorded over the last few months in mind, we can assume that most (if not all) of the discounted shares have already found their way to the open market. The money from the convertible notes has also run out, however. That’s why, yesterday, in addition to the notification of late filing, PPCH also published an 8-K form which says that a new convertible note has been drawn up.

The holder is an entity called MG Partners II Limited and it will be entitled to convert the debt at either a 20% discount to the market price, or a fixed rate of $0.0346 per share, whichever is lower. The conversion provisions aren’t as horrific as the ones carried by the older convertible notes (a portion of which might still be outstanding, by the way), but if PPCH gets closer to the levels it was traded at a couple of months ago, and Wealthy Venture Capitalist reckon that it will, the debt will still present a threat. Considering it carefully before putting any money on the line is absolutely essential.