Propanc Health Group Corp (OTCMKTS:PPCH) Remains Highly Volatile
Last Friday the stock of Propanc Health Group Corp (OTCMKTS:PPCH) registered an intraday high of $0.039 but quickly crashed back down closing the session 6.4% in the red at $0.029. Yesterday, on the very next session, the company did the exact opposite closing with a gain of over 20% at $0.0349. There is an explanation for the extremely volatile performance.
PPCH are developing a cancer drug called PRP that is currently undergoing animal efficacy studies in several tumor cell lines. The company is preparing for a couple of regulatory agency meetings early next year while also expressing their intention to try and uplist to a national exchange. Even more important, however, is the recently announced financing deal. PPCH raised $1.2 million under a promissory note and they could receive subsequent financing of up to $4 million. Not to mention that a few months ago the company also retired some of its convertible debt before it could be turned into more discounted common shares.
Despite the positive steps taken by PPCH investors must be extremely careful when dealing with the company. There are numerous red flags that should not be underestimated in the slightest. The annual report filed at the end of September showed that as of June 30 PPCH had:
• $107 thousand cash
• $621 thousand total current assets
• $3.68 million total current liabilities
• ZERO revenue
• $3.4 million net loss
Due to the company relying primarily on convertible debt to fund its operations during the fiscal year covered by the report over 181 million shares were issued as conversions of debt at prices ranging from $0.0006 to $0.0035. Another 7.1 million shares were issued in August and September but this time the conversion prices were a bit higher – between $0.01716 and $0.02365. As we said PPCH did repay some notes but the amount was quite underwhelming when compared to the nearly $1.8 million convertible notes that were outstanding as of June 30.
The recent financing raises some alarms too. The $1.2 million were provided by MG Partners II Limited, an affiliate of Magna Corp. And if you are not familiar with Magna they are one of the most notorious toxic funders in the world of pennystocks. According to the terms of the promissory note if MG Partners do not wish to proceed with the subsequent financing the note will become convertible at the lower of $0.0346 or a 20% discount to the average of the two lowest closing prices of the common stock in the five trading days prior to the date of conversion.
Propanc have also been touted in quite a few PRs issued by The Wealthy Biotech Trader and more recently by Microcapspeculators. As we have said on numerous occasions the parent company of The Wealthy Biotech Trader has received a $60 thousand convertible note from PPCH as well as a monthly fee of $5000. The Microcapspeculators disclaimer states that their parent company “has been compensated $6,000 by Regal Consulting, LLC. on behalf of Propanc Health Group, Corp.”
If PPCH manage to complete the subsequent financing while also putting the issuance of discounted shares under control they could once more form a more prolonged uptrend. Keep in mind, however, that their cancer drug is still in the very early stages of the process towards potential commercialization and that there are no guarantees that it will be approved.
