VAPE HOLDINGS INC. (OTCMKTS:VAPE) Tries To Make A Recovery
VAPE HOLDINGS INC. (OTCMKTS:VAPE) has been painting the charts red with a continuous downward streak for some months now. Yesterday it rose 14.97%, despite the negative commentary about it on the web and the shrinkage of the marijuana market due to SEC suspension-induced fear.
The company had been a popular choice for investors even before the marijuana rush hit the market with full force. Back then VAPE was called Peoplestring Corp. and fluctuated around the dollar mark, despite its obvious shortcomings. A 40 to 1 reverse split and a tremendously spectacular crash later, the company is traded at $2.15 and market cap has been reduced to a scant $18 million.
Technically it is true that the company was traded as a pot-stock for a while, so it may appear odd that the company has been in decline despite the green rush. However, no amount of hype and hope can compensate for the fact that its 10-Q showed that it had $20 thousand in total assets and NO REVENUES at the end of 2013. Its most recent report shows a bit of progress, but also reveals a ton of red flags:
- Cash – $598 thousand
- Total current liabilities – $556 thousand
- Total liabilities – $30.4 million
- Revenue – $30 thousand
- Loss on settlement of debt – $29.5 million
- Net cash used in operating activities – $252 thousand
It turns out that, due to some shenanigans involving the unclear wording of promissory notes, combined with the reverse split, VAPE technically ended up owing a ridiculous amount of money. The report claims that the issue has been resolved successfully with the creditor, but the fact that such a misunderstanding has occurred in the first place is disconcerting in and of itself. In light of this, perhaps VAPE‘s revenue is a better indicator of the company’s progress, but that number is also grossly insufficient to give investors a reason for joy.
Another point of concern is the fact that Growlife Inc. (OTCMKTS:PHOT)’s Acting President, a Mr. Kyle Tracey, is currently VAPE‘s CEO, CFO AND one of the two members of the board of directors that the company has listed in its filings. His name has been used to the company’s advantage when PHOT appeared promising, but as a result of the controversy surrounding PHOT‘s suspension, some investors now regard Mr. Tracey with suspicion. And they’re probably right to do so.
Investors are encouraged to seriously consider the filings and all the reliable information that is available on the company when deciding to commit to high risk stocks.
