Georgi Kamburov

Vapor Corp (OTCMKTS:VPCOD) Jumps Up

by Georgi Kamburov June 22, 2016

At the end of yesterday's session the stock of Vapor Corp (OTCMKTS:VPCO, VPCO message board) was sitting at $0.0002 for a massive gain of exactly 100%. While the performance of the ticker throughout the trading day was neither consistent nor encouraging it cannot be denied that the outcome of the session was extremely positive. Will VPCO manage to avoid dropping back to the bottom of the chart, though?

Some may find the fact that the company's shares are trading at prices deep in the triple-zero ranges as puzzling at first. After all, according to the latest quarterly report as of March 31 VPCO had massive cash reserves of more than $22 million and over $3.7 million in quarterly revenues. Even these impressive results, however, cannot offset the negative effects of the constant dilution.

Dealing with pennystocks, even for a little while, will inevitable present you with some egregious examples of dilution. It is not that uncommon for companies to issue millions upon millions of shares either as a conversion of notes or in an attempt to raise some much needed funds. The rate at which VPCO have been diluting their common stock, however, is simply in a league of its own.

Back in March the company performed a 1-for-70 reverse split that left them with around 45 million outstanding shares. By May 12 VPCO had managed to max out their authorized amount of 5 BILLION shares. The issuance of 4.9 BILLION shares in less than two months is already nothing short of a total nightmare but it seems that VPCO are currently trying to outdo themselves.

In order to free sufficient room for the issuance of more shares for the exercise of more Series A warrants the company decided to perform a new reverse split, this time at a monstrous ratio of 1-for-20,000, at the start of June, less than three months since the previous split. According to the 8-K filing following the split VPCO would be left with approximately 250 thousand shares. Opening the OTCMarkets profile of the company reveals that as of June 14 there were 22.4 million outstanding shares, which is actually not that bad considering the history of the company. Yesterday, however, in just six and a half hours investors actually managed to trade close to 2.4 BILLION shares. Seeing such a tremendous volume being shifted in a single day could mean that VPCO have issued more than 2 BILLION shares in the span of seven days.

Yesterday the company did announce that it will try to conduct a registered exchange offer in an attempt to exchange the Series A warrants for $0.25 and a Series B warrant for each Series A warrant. So far 2.8 million Series A warrants have been exchanged. The problem is that as of June 20 there were 70.6 million outstanding Series A warrants, each of which can be exercised on a cashless basis for 5,410 common shares. This means that if all of warrants get exercised VPCO will have to issue more than 380 BILLION shares.

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