Viking Minerals Inc (OTCMKTS:VKML) Loses More Ground
A few weeks ago, Viking Minerals Inc (OTCMKTS:VKML) was quietly simmering in the sub-penny levels. Volumes were negligible and the price movement was virtually non-existent.
Then, on March 5, the company announced that there will be a change in the management team and the market sentiment was instantly transformed. Charles Irizarry, VKML‘s former CEO, stepped down from his position and the helm was taken over by Robert Coleridge. As you can see from the chart, investors reacted positively and we should note that they did have a few reasons to be happy.
During Mr. Irizarry’s stint, VKML went through more than a few promotional campaigns and it’s fair to say that the stock didn’t do too well. Numerous press releases about properties acquisitions were issued, but publishing the company’s financial reports wasn’t among Mr. Irizarry’s priorities.
In fact, between March 2013 and January 2014, the company filed absolutely nothing with the SEC. A couple of months ago, Mr. Irizarry decided that it’s finally time to update the shareholders on the developments around the company and the filings revealed that as of December 31, 2013, VKML had:
- no assets
- no revenues
- $105 thousand in liabilities
- an accumulated deficit of nearly $31 million
The enthusiasm of Mr. Irizarry’s resignation and the appointment of Mr. Coleridge (who, by the way, worked for Microsoft Corporation (NASDAQ:MSFT) at one point in his career) resulted in a rather exciting surge for the stock. The performance was bit shaky at first, but once it got going, it seemed like there was nothing to stop VKML.
On Wednesday, a press release came out and a lot of people expected it to give the ticker another push in the right direction. The company announced that they are about to acquire an entity called Indie Growers Union LLC which will allow them to venture into the ever-growing marijuana business.
Instead of going up, however, VKML plummeted and wiped out nearly 60% of its value. It wasn’t going to stop there either. More than 29 million shares changed hands during yesterday’s session while the stock incinerated another 30% of the market cap.
The reason for the sudden and violent drop can be found in the details around the deal. Naturally enough, the acquisition will involve the issuance of quite a lot of shares and the new management team has apparently decided that the only possible way of keeping the O/S count at bay is to effectuate a reverse split. Understandably, the shareholders are not ecstatic about it.
Yesterday’s selling was probably affected by Growlife Inc (OTCBB:PHOT)’s suspension as well, which, by the way, brought most of the OTC-listed pot stocks down. After all, PHOT was considered by many to be one of the more solid ventures in the cannabis sector.
VKML, on the other hand, have yet to prove themselves and it’s clear that they’re not off to the best of starts. The split has already enraged a lot of investors and the fact that their new headquarters seems to be located in a residential house isn’t really helping with the company credibility.
The same address, by the way, can be found in the filings of other penny stocks like Frontier Beverage Company Inc (OTCMKTS:FBEC) who used it as the location of their principal office not that long ago.
Doing a lot of due diligence is, as always, absolutely essential.
