Propanc Health Group Corp. (OTCMKTS:PPCH) Slides Right Back Down
Propanc Health Group Corp (OTCMKTS:PPCH) managed to make quite an impressive run after its latest announcement, but the hype surrounding it had already started to dissipate by the time Friday rolled along, and when the market finally had time to react to PPCH‘s latest 10-K things turned messy indeed.
It is certainly good news that PPCH has secured some funding so that it can continue with its operations. $1.2 million is a lot of cash, and it will probably last PPCH for quite some time. However, investors should not neglect the second part of the 8-K describing the deal.
Although the company doesn’t brag about the other details of their agreement, the debt on “the Note will also be convertible into common stock at the lower of (i) $0.0346; or (ii) a twenty percent (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”.
It is clear why PPCH was forced to take this step – its latest financial report looked positively dreadful:
- Cash – $107 thousand
- Current assets – $621 thousand
- Current liabilities – $3.68 million
- Annual revenues – ZERO
- Annual net loss – $3.41 million
However, it could be argued that the issuance of more toxic convertibles does not solve the company’s issues. Indeed, it seems to severely aggravate an already existing problem in order to deal with another, albeit a more pressing one.
So let’s recap. PPCH is a development stage OTC Markets pharmaceutical penny stock, burdened with toxic convertibles, whose financials look simply terrible and whose product is still in the early stages of development. What more needs to be said – except maybe “let the buyer beware”?
