Neah Power Systems Inc (OTCBB:NPWZ
, NPWZ message board
) registered some impressive numbers during Friday's session. It opened the day at $0.0245 and although it remained pretty much stationary during the first few hours, it really flew in the afternoon. When the closing bell rang, it was sitting at $0.033 which represents around 37% in daily gains. The volumes are just as remarkable - more than 27 million shares changed hands bringing the trade value to around $832 thousand.
That's quite an achievement for a ticker that was hovering below the $0.01 per share mark just three months ago. The problem is, the run doesn't seem to be caused by anything immediately obvious.
The latest press release came out a couple of weeks ago, there have been no SEC filings to push the price on such a run, and there doesn't seem to be a paid promotion currently running. All in all, NPWZ seems to be propelled up the charts largely by the excitement coming from their clever products. And we should note that they are indeed clever.
The company uses some interesting technology to develop portable charging devices. Apparently, some of the gizmos will use fuel cells to produce electricity that can top up the battery of your mobile phone, even if the oxygen levels around you are (for some reason) very low.
They launched the first generation of the BuzzBar device in December and, according to the website, it's currently sold out. They are working frantically on getting the second generation out as soon as possible and say that, although the demand for the product is overwhelming, they are doing their best at keeping up with the pace.
Considering the figures found in their latest 10-Q, they better be. Here's a quick recap of NPWZ's financial situation as of December 31:
- cash: $227 thousand
- current assets: $293 thousand
- current liabilities: $1.5 million
- no quarterly revenue
- quarterly net loss: $857 thousand
It's clear that the financials above are not really substantial enough to justify the $28 million market cap. Unfortunately, there are a few other problems.
Everyone seems extremely excited about the patented, award-winning fuel cell technology, but sadly, it's not quite ready for commercialization. The BuzzBar is the only product that is currently on the market and although you can use it for topping up the batteries of your mobile device, it doesn't use fuel cells to do it. The revolutionary technology will actually be implemented in a couple of chargers - The BuzzCell (aimed at the consumer market) and the military-oriented PowerChip. NPWZ's website says that the BuzzCell is "coming soon" while the PowerChip is still under development.
There aren't any launch dates for the two gizmos, but, having in mind the lack of substantial financial resources, they could be having some problems getting them on the market. Speaking of which, their financing activities so far have greatly affected the share structure. Between February 2013 and February 2014, they issued nearly 320 million new shares and a large part of them saw the light of day as a conversion of debt at rates that are way lower than the current market price.
The former note holders could decide to take advantage of the profit opportunity and if they do, the ticker will take the brunt of the impact. That's why, carefully considering the risks and doing a lot of due diligence is absolutely essential.