On Monday the stock of Active Health Foods, Inc. (OTCMKTS:AHFD) shot up the chart by more than 87% and logged in the absolute record for the company number of 178 million traded shares. The impressive climb was only possible because of the increased attention towards the company generated through a paid pump. On the very next day though the company crashed hard and closed the day 23% in the red at $0.0023 after the even bigger number of 189 million shares got dumped on the market.
There certainly isn’t a shortage of reasons for the dreadful performance of the stock. AHFD
have been going straight for the bottom for more than two years now and they will find it very hard to change the direction of their stock. Despite having two products – the Active X Energy Bar and a series of flavored soft drinks the company is in a dire financial state. AHFD
finished the first quarter of the year with the following results:
• $2 thousand cash
• $44 thousand total assets
• $2.3 million total liabilities
• $4 thousand revenues
• $2.4 million net loss
But an even bigger issue than the depressing financials is the crushing dilution of the common stocks. In July, 2013 AHFD
did a massive 1-for-1000 reverse split that left them with just 3.7 million outstanding shares. As of June 5, this year, that number had already turned into 590 million outstanding shares and judging by yesterday’s traded volume it may be even bigger now.
With quite a few convertible notes still outstanding investors should expect the dilution to continue. Not to mention that the holders of those notes can convert them into common shares at a 50% discount from the market price of the stock. AHFD
will also have to issue over a billion shares to AGS Capital Group, LLC as part of their settlement agreement.
The risks around the stock demand the use of caution. Do your own due diligence and never invest unaffordable sums.
Yesterday another pumped stock – 3D Pioneer Systems Inc (OTCBB:DPSM
) also suffered a double-digit crash. The company slashed 13% of its price and slid down to $0.505. Terra Tech Corp (OTCMKTS:TRTC
) on the other hand recovered by 15% and returned to $0.49 per share despite the failure of the company to receive a permit for a medical marijuana dispensary.