Propanc Health Group Corp (OTCMKTS:PPCH) Corrects
On Wednesday the stock of Propanc Health Group Corp (OTCMKTS:PPCH) exploded adding over 88% to its value and closing the day at $0.084. With over 71 million shares changing hands the dollar value for the day surpassed $5 million. The reason for the massive spike up the chart was a PR published by the analyst firm SeeThruEquity in which they assigned PPCH a 12-month price target of $1.52.
Although SeeThruEquity have not been compensated for their research report and the price target of over a dollar and a health caused investors to enter a state of buying frenzy you should remember that nothing around PPCH has actually changed. The company is still surrounded by numerous red flags that simply demand the use of caution.
According to the latest financial report at the end of March PPCH had:
• $168 thousand cash
• $308 thousand total current assets
• $2.1 million total current liabilities
• ZERO revenues
• $454 thousand net loss
$1.1 million of the reported liabilities consisted of convertible notes payable. The company has already put its long-term shareholders through a crushing amount of dilution and with so many notes still outstanding the issuance of shares may not come to an end any time soon. As we told you in our previous article the outstanding shares of the company increased by 266% for the period between November 19, 2014, and May 15, 2015, and from 90 million surpassed 330 million. Out of the newly printed shares nearly 30 million shares were issued at $0.0006 or $0.0007 while over 125 million shares had prices ranging between $0.0011 and $0.0020.
The company has stated on numerous occasions that it is committed to minimizing shareholder dilution and a couple of weeks ago two notes in the amount of $100 thousand were indeed prepaid before they could have bene converted into shares. At the same time though PPCH have decided to pay $5000 a month in addition to a $60 thousand compensation in the form of a convertible note in order for the company to be featured in the PRs published by the entity Wealthy Biotech Trader.
Investors who are contemplating making an investment in the company should exercise caution. PPCH’s only drug candidate, PRP, is still in animal trials and it will take the company years of research and clinical studies before an eventual approval by the FDA. The necessary funds to carry even a single drug through the whole process are truly enormous and if Propanc continues to rely on convertible debt the dilution could have a devastating impact on the movement of the stock.
With all this in mind yesterday’s correction of close to 9% shouldn’t come as a surprise. Still the stock avoided a more severe drop and is currently sitting at $0.0765 per share. The market cap of PPCH has surpassed $25.6 million and we will see if they will manage to support that valuation during today’s trading.
