AccelPath Inc (OTCMKTS:ACLP) Tries to Get Up

AccelPath Inc (OTCMKTS:ACLP) changed its business plan in Q4 of 2014. Apparently, the management team weren’t particularly happy with the results they were achieving through the medical diagnostics services and decided instead that they are going to focus on the beverage industry.

In order to do that, they completed a couple of acquisitions. First, ACLP bought a 70% stake in a company called Village Tea Distributors Company, Inc and later it acquired 52% of STI Signature Spirits Group, LLC. The transactions didn’t exactly turn the ticker into the hottest penny stock out there, but some people were happy with the new direction. On November 6, 2014, for example, ACLP experienced a volume spike and reached $0.0016 per share. Unfortunately, shortly after, it found itself in free-fall mode. Five weeks later, the stock hit the absolute bottom of $0.0001 per share and it spent the next five months stuck there simply because it couldn’t go any lower. But why did it do that?

As soon as you open the latest 10-Q, you’ll see that the acquisitions from Q4 of 2014 didn’t really bring in much in terms of results. Here’s what ACLP recorded at the end of March:

  • cash: $4,109
  • current assets: $293,610
  • current liabilities: $5,967,534
  • NO quarterly revenues
  • quarterly net loss: $695,978

The atrocious balance sheet did play its part in the stock’s downfall, but it was far from the only problem. ACLP‘s shareholders were also forced to go through quite a lot of dilution.

The company executed a 1 for 250 reverse split in September 2014 and immediately after it, the number of issued and outstanding shares stood at about 19 million. On February 23, 2015, it was already sitting at 685 million and last week, when ACLP filed the Q1 report, they told us that it’s now hovering above 794 million.

As is often the case in Pennyland, the devastating dilution was primarily caused by toxic debt. Over the years, ACLP has issued convertible notes both in exchange for cash, and in exchange for services. All of the debt can be converted into common stock at a discount to the lowest market price registered during a rather long (twenty to thirty days) period prior to conversion. Wonder what this means? It means that between March 31 and May 30, ACLP issued 109 million shares in order to satisfy $5,500 worth of convertible debt and $300 worth of associated expenses. In other words, 109 million shares saw the light of day at $0.00005 per share (that’s right, four zeros).

As you can see, there’s no shortage of things to keep the stock firmly glued to the bottom of the chart. Despite this, ACLP showed signs of life yesterday. The session started normally enough, but about forty minutes after the opening bell, the ticker suddenly spiked up and shortly after, it hit an intraday high of $0.0004 for the first time in almost six months. It then settled down, but it still managed to finish the day at $0.0002 which, as you might have calculated already, represents 100% in gains. What’s more, it generated a dollar volume of nearly $130 thousand which goes to show that investors are interested once again.

The reason for this is a press release according to which Village Tea, ACLP‘s majority owned subsidiary, is about to re-launch its brand in a selected location in Dallas, Texas. The management team gave the address and invited everybody to go there and test the loose leaf teas for themselves. Apparently, investors reckon that this is a big deal, but does it mean that ACLP can continue going up?

If the company CEO’s track record is anything to go by, things do look a bit suspicious. Gilbert Steedley is also at the helm of two other OTC listed enterprises – Texhoma Energy Inc (OTCMKTS:TXHE) and True North Energy Corp. (OTCMKTS:TNEN). Both of these tickers have made numerous attempts to make a run towards the higher end of the charts over the last few months and both of them have failed rather miserably. Currently, they’re both sitting at $0.0001 per share.

Of course, ACLP might just turn out to be different. Make sure you bear one thing in mind, though. While you’re weighing the odds, someone might still be converting debt into stock at a rate of $0.00005 per share.

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