VAPE HLDGS INC (OTCMKTS:VAPE) Wipes a Fifth of Its Value

On Tuesday Vape Holdings Inc (OTCMKTS:VAPE) announced a new financing deal in the form of an equity line of up to $5 million over the course of three years. The news was enough to propel the stock of the company over 14% in the green on that day but it seems that the excitement simply couldn’t be maintained. Yesterday, on the very next day after the announcement, VAPE crashed by 20% and dropped to a close at $0.0064.

While the fact that now VAPE have access to additional funds, not to mention that the equity sold under the agreement won’t feature any price discounts, is indeed extremely positive investors might have noticed that in the 8-K filing covering the financing the company also revealed the latest conversions of debt. This time over 11 million shares were issued at an average price of $0.0018 on April 7 while six day later over 14 million shares saw the light of day at an average price of $0.0024. This latest round of dilution has brought the outstanding shares of company to nearly 296 million.

With the O/S now sitting just below 300 million you might not be able to believe that less than 7 months ago VAPE had just 19.5 million outstanding shares. The company has been trying to consolidate its outstanding convertible debt under one partner, the same entity that is providing the money for the $5 million equity line, and as of March 29 around $779 thousand of the approximately $1 million in convertible debt has been restructured. As the 8-K filing showed, though, millions upon millions of discounted shares are still coming into existence and the threat of them being unleashed on the open market won’t be going away any time soon.

When approaching VAPE you should be extremely cautious. Take the necessary time to do your own due diligence and set appropriate time horizons for your trades.