Georgi Kamburov

Virtual Sourcing, Inc. (OTCMKTS:PGCX) Falls Back Down

by Georgi Kamburov August 6, 2014

On Monday the stock of Virtual Sourcing, Inc. (OTCMKTS:PGCX, PGCX message board) surged up the chart and after adding the massive 100% to its value closed the day at $0.019. Many investors expected the positive momentum to carry over to the next session and push the stock through the 2 cents mark. Such heights proved to be too much for now though and instead the company crashed hard and closed 17.8% lower at $0.0156.

For close to 11 months PGCX couldn't stop its downwards slide and as a result it lost over 99% of its value dropping from a high of $1.1 to just $0.0023 at the end of June. Still, last month investors returned to the company and despite the climb being rather inconsistent the stock still managed to escape from the double-zero price ranges.

The sudden enthusiasm displayed by investors was caused by a couple of PRs issued by the company. On July 15 it announced that the subsidiary Allied Recycling Corp has signed a wholesale distribution agreement that enabled it to start distributing barrels of chemicals used in the treatment of oil derived waste water. Just nine days later the first purchase order was revealed – a minimum of 70 barrels and a maximum of 105 per week for a whole year. The revenues from the deal are estimated to be between $3.6 million and $5.3 million while profits range between $700 thousand and $1 million.

Such numbers are certainly impressive but will they be enough to offset the red flags around the company? If you open the recently filed S-1 registration statement and scroll down to page 44 you will see that at the end of March PGCX was in an extremely worrying financial state:

• $276 cash and total assets!!!
• $961 thousand total liabilities
• ZERO revenues
• $1.3 million net loss for the nine months period

PGCX are trying to improve their financial resources through the aforementioned S-1 statement. In it they are registering 25 million shares with the intention to sell them for much needed funds. The problem is that each share was priced at $1, valuation that is over 5000% higher than the current market price. 

Another problem could be the 10 million shares also registered in the same statement. They are underlying a convertible note issued to WHC Capital, LLC back in December, 2013. The terms of the note allow WHC to convert it into common shares at a price equal to 50% of the lowest intra-day trading price for the ten trading days preceding the conversion.

The past history of the company should also be taken into consideration. On a couple of occasions PGCX has been targeted by paid pumpers. In fact one of the main reasons that the company was able to climb above a dollar last year was the widespread promotion touting it at the time.

The recent announcements certainly sound promising but the company remains a risky choice for investment. The volatility of the stock shouldn't be underestimated either. Do your own research and weigh all the risks before committing to any trades.

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