Borislav Tonev

Hydrophi Technologies Group Inc (OTCMKTS:HPTG) Trips and Falls

by Borislav Tonev March 9, 2016

There are a few things you might not like about Hydrophi Technologies Group Inc (OTCMKTS:HPTG, HPTG message board). The performance over the last three sessions, for example, is hardly stellar. A 1% slip up on Friday was followed by a 22% crash on Monday and after it wiped out almost a quarter of its value during yesterday's session, the stock stopped at $0.01 per share which is around 50% below the intraday highs logged last week. But are investors bothered about that?

Not really. They reckon that the drop, as steep as it was, was to be expected considering the massive surge HPTG experienced prior to it.

The latest 10-Q is not exactly perfect, either. It shows that at the end of Q3, the company had less than $1 thousand in the bank, a working capital deficit of over $6 million, and a sizable net loss.

Investors, however, couldn't care less. All they're thinking about at the moment is the acquisition of a company called Pro Star Freight Systems. We can see why.

The 8-K came out three and a half months ago and it said that the new subsidiary is a working business with tens of millions of dollars in annual revenues and, more importantly, a positive bottom line. Since then, a couple of press releases have led many people to believe that Pro Star is actually growing.

What neither the SEC filings, nor the PR's tell us, however, is what the audited financial statement of the new daughter company looks like. It was supposed to come out within seventy-one days of the publishing of the 8-K, but it's still nowhere to be found. A recent change in the company's fiscal year end means that shareholders will also need to wait for a bit longer until they see what HPTG and Pro Star's financial positions were at the end of 2015.

At this point nobody seems to be nervous about this, and the stock's supporters around the message boards and social networks seem to be actively ignoring the problem. They will most likely start to pay more attention to it if a large amount of discounted stock hits the open market, however, and, as we mentioned in our previous articles, this possibility is not entirely unimaginable. There was a serious number of notes convertible at a discount at the end of Q3 and although a portion of them might have been eliminated with the closing of the Pro Star merger, the lack of any recent SEC filings means that nobody can say for sure whether the issue has been completely dealt with.

That's a bit of a problem when you have in mind that not more than four and a half months ago, common shares were being issued as a conversion of debt at a rate of just $0.0005 per share.

Make sure you consider all the potential pitfalls before you put any money on the line.

About ten minutes into today's session, HPTG is traded at $0.0093 – a further 7% in the red.

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