The stock price of VAPE HOLDINGS INC (OTCMKTS:VAPE) touched a nickel on Friday, after almost 13 million shares changed hands. It continued to move north on the chart in the following trading session but failed to extend gains on Tuesday. Yesterday, it declined more than 7% to close the day at $0.0590 on share volume of 4.95 million compared to average share volume of 1.66 million.
The initial buying interest was noted after VAPE HOLDINGS release a PR covering recent corporate developments and future plans. Investors instantly jumped in to buy the stock once the update was released. They should revaluate their holdings as VAPE is not one of the most stable of stocks, even by the lax standards of the OTC marketplace and there are some good reasons for same.
The first major problem is dismal financials as VAPE reported net loss of more than $436,000 in latest reported quarter. As per the last report, cash reserves came at $134,000, current assets at $818,000 and current liabilities at $1.3 million. The revenue in quarter was $282,000.
Financial performance is not even the biggest threat to shareholders value to be identified when evaluating VAPE’s overall performance. As per the latest filings, the company has convertible notes of worth $1.6 million that can be converted into VAPE stock at discount, plunging the stock into the depths at any time in coming period.
Since the end of August 2015 $227,000 worth of convertible notes has been converted into over 5.1 million shares. It clearly suggests investors should remain cautious when investing in VAPE. As of September 2015, the company reported 18.3 million outstanding shares and since VAPE authorized shares are 1 billion, there is nothing to prevent note holders from eroding investor value in dilution in coming period.
VAPE HOLDINGS INC (OTCMKTS:VAPE) faced the first normal correction in the last few days as it finished the last trading session with a loss of 7.09%. The volume of the day remained high at 4.9 million against the daily average of 2.6 million but still the lowest compared to the earlier days in the current week. The loss may have looked large but the intraday recovery from the day low can’t be ignored, consider the larger uptrend in the short term at least. The real challenge lies higher around $0.10 levels.