Vape Holdings, Inc. (OTCMTKS:VAPE) Returns Back to Reality
In the past four months we saw how powerful hype can truly be with numerous pennystocks skyrocketing on nothing more than baseless promises for the future coupled with the magical word “marijuana”. One of the stocks that benefitted the most from it was Vape Holdings, Inc. (OTCMKTS:VAPE) – without any products or, in fact, any operations within the marijuana industry they were nonetheless picked up by the boundless optimism of traders and boosted to the unreal heights of more than 40 dollars.
At that point VAPE commanded a massive market cap of $200 million while at the same time they finished the quarter ending December 31 with:
• $19 thousand cash and total assets
• $349 thousand total liabilities
• ZERO revenue
• $267 thousand net loss
• $349 thousand total liabilities
• ZERO revenue
• $267 thousand net loss
That is right – at the end of 2013 the company owned nothing but $19 thousand in cash. It shouldn’t be a surprise then that VAPE‘s downfall has been equally as spectacular as their ascent. Starting from a high of $36 on March 18 by now they have wiped more than 92% of their value closing yesterday’s session at $3.15.
Even the fact that the acquisition of HIVE Ceramics was finally completed and thus VAPE posted their first $100 thousand in revenues for April with another $250 000 expected in future sales was not enough to stop the slide for more than a day. Well, the numbers may certainly mean that VAPE are starting to move forward with their business plan but they are far from enough to offset the massive problems around the company.
First of all their Chief Financial Officer decided to resign right in the middle of the tremendous run up the chart of their stock which is never a good sign. Then VAPE started having troubles with some of its warrant holders that demanded an adjustment of the exercise price of the warrants. As a result the number of outstanding shares rose from 6.5 million on February 19 to more than 8 million just two months later. According to the latest 8-K Form filed by VAPE they expect another 2 million shares to be issued to the rest of the warrant holders.
Even more dilution could be caused by the convertible notes signed in February and although two of them have conversation prices of $2 and $3, at the time the market price of the stock was moving between $10 and $15. Investors should also note that the CEO of VAPE Mr. Kyle Tracey was also a director of the recently acquired Hive Ceramics alongside Ms. Vicky Tracey.
At the moment the company is still grossly overvalued with a market cap of $20 million so further corrections are more than likely. Be extremely careful when trading with their stock and always do your own due diligence. 