Georgi Kamburov

VAPE HOLDINGS INC (OTCMKTS:VAPE) Surges After Corporate Update

by Georgi Kamburov October 9, 2015

After being silent for close to 2 months VAPE HOLDINGS INC (OTCMKTS:VAPE, VAPE message board) issued a new corporate update yesterday. The PR caught the attention of the market immediately and as a result 6.8 million shares changed hands throughout the session, which is a new record for the company. The intense buying pushed the ticker to a close 32% in the green at $0.033. Despite the impressive gain the stock is still sitting more than 90% lower than its highs from just two months ago and if you go further back the chart the picture gets even scarier.

It is true that the company did announce several encouraging developments yesterday. VAPE have streamlined their business while cutting the expenses by quite a bit. By the end of the year a number of new products should also be released. Will this be enough to help the stock recover at least some of its losses?

VAPE's latest financial report was far from impressive - as of June 30 they had:

• $134 thousand cash
• $818 thousand current assets
• $1.3 million current liabilities
• $282 thousand revenues
• $436 thousand net loss

The quarter was not particularly successful for the company as the amount of generated revenues was 29% lower than the previous quarter and 22% below the result for the same period last year.

Investors have a lot more to worry about though. $1 million of the reported liabilities consisted of convertible notes with another $622 thousand worth of convertible notes sold in August. The potential dilution is massive and the issuance of discounted shares has already began. As the two 8-K forms (here and here) and yesterday's PR state since August 26 $226,590 of convertible debt has been turned into more than 5.1 million shares. The outstanding shares of the company as a whole have grown from 11.7 million as of June 30 to 18,347,699 as of September 29. Some investors are speculating that judging by the recent daily volumes the O/S could have become even bigger by now.

The red flags surrounding VAPE are extremely serious and the company has a long way to go if it wants to deal with them. Take into account all of the risks and adjust your trades accordingly. 

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