Vape Holdings Inc (OTCMKTS:VAPE) Slips Again
Vape Holdings Inc (OTCMKTS:VAPE)’s name, ticker symbol, and business plan were changed back in January and the company became just one of the many cannabis-related enterprises in Pennyland. VAPE‘s new incarnation sent the ticker on a run that few other penny stocks have experienced.
In a matter of just two months, it managed to climb from under $0.50 per share all the way to an all-time high of $41.25. At these levels, the market cap stood at well over $200 million, but a quick look at the latest 10-Q (which came out on February 20) reveals that VAPE will need to work quite a bit harder to prove to us that they really deserve it. Here’s what the company had at the end of last year:
- total assets: $19 thousand
- total liabilities: $349 thousand
- no revenue
- quarterly net loss: $267 thousand
Some Seeking Alpha contributors also saw the rather grim financial statement and decided to write a couple of negative articles which put enormous pressure on the price. In fact, in a matter of just thirty-six days, VAPE managed to drop from around $36 per share all the way to just $2.36 bringing the cumulative losses for some people to over 93%. On Thursday, the ticker managed to bounce after the company announced some healthy sales figures, but it quickly returned to the downward trend on Friday when it wiped out 17% of its value on a dollar volume of just under $8.3 million. Less than half an hour into today’s session, it’s another 11% down.
That’s a truly appalling performance and we can see that quite a lot of investors were caught off-guard. But is it really that surprising?
It’s pretty clear that VAPE‘s remarkable ascend was fueled by nothing more than hype and excitement and we all know that these two have never really been good enough at supporting penny stocks in the long run. Indeed, the acquisition of HIVE Ceramics LLC was completed a few weeks ago and the recent press releases suggest that with its assets in place, the future should be a lot brighter. Unfortunately, at the moment, there are no consolidated financials available which means that all investors can do is keep their fingers crossed and hope for the best. And while they’re at it, they might want to keep a close eye on the SEC filings.
A recent series of 8-K forms reveals that a few skeletons might be coming out of VAPE‘s closet. People who received some warrants back in 2011 (when the company was still trying to develop a social network) are now confronting the new management team and are demanding a re-evaluation of the exercise price. VAPE have decided that issuing some stock could solve the problem, but it’s clear that the shareholders are not particularly happy about this decision.
In actual fact, they do have some reasons to be upset. The latest 10-Q, for example, tells us that back in February, there were around 6.5 million shares issued and outstanding. An 8-K from Thursday reveals that the O/S count has now grown to over 8 million and informs us that warrant holders could demand the issuance of approximately 2 million additional shares.
Hopefully, VAPE will be able to keep the future dilution at bay and hopefully, they will also be able to support their promises with some actual figures in the financial statements to come. Until they do, however, careful consideration of all the risks is absolutely essential.
