AvWorks Aviation Corp (OTCMKTS:SPLI) Tanks Despite Promising Results
It’s been two and a half months since AvWorks Aviation Corp (OTCMKTS:SPLI) announced the reverse merger with a company called Vapor Group Inc. The deal was certainly well received by the shareholders since, as is pretty clear from the latest 10-Q, SPLI failed spectacularly with their previous business plan.
A couple of press releases, promises of a great future, some no-compensation promotional emails, and a lot of buzz around message boards and social networks drew in quite a lot of attention and people started thinking that the entity surviving the merger might actually be one of the few truly successful companies on the OTC Markets.
Predictably, the stock started climbing the charts at an incredible rate. When the merger was announced, SPLI was hovering way below $0.01 per share, but on March 26, just two months later, it hit a 52-week high of a whopping $0.45 per share.
It looked like there was nothing to stop SPLI from going further up, but then, some skeptics appeared. A few Seeking Alpha contributors decided to publish a couple of not-so-positive articles and it’s quite clear that their arguments were enough to turn the tables. Suddenly, SPLI started sliding towards the bottom which, in turn, raised doubts in the minds of a lot of people. Even the optimistic press releases issued by the company weren’t enough to break the fall.
But while some investors got hit by the panic attack, others believed that the corrections are actually a really good buying opportunity. They argued that SPLI is a working entity which will be proven by the audited financials for 2013 and reckoned that once the figures are out, the ticker will be able to show its full potential.
SPLI published the aforementioned figures about an hour and a half before yesterday’s opening bell and we should note that things are looking rather well. The pro forma consolidated statement shows that as of December 31, 2013, SPLI had:
- cash: $48 thousand
- current assets: $944 thousand
- current liabilities: $1.1 million
- yearly revenues: $1.9 million
- yearly net income: $161 thousand
It’s clear that SPLI‘s financial situation is not perfect – the cash reserves are not huge and there is a negative working capital. There’s no denying the fact, however, that finding a small cap company with nearly $2 million in revenues and a positive bottom line is not an everyday occurrence.
Everyone was expecting to see the ticker flying high after the promising financials, but unfortunately, something went terribly wrong. A record-breaking 42 million shares changed hands resulting in a dollar volume of more than $7 million. SPLI opened the day below Friday’s close, tried to make a brief run towards $0.30, but then plummeted to the ground. When the closing bell rang, it was sitting at $0.155 (38% below Friday’s value). The cumulative losses from the last two weeks now exceed 60% and it’s fair to say that a lot of investors are discouraged.
A recovery is, of course, possible, especially in light of the decent-looking balance sheet, but the drop from the last couple of days really goes to show that basing your investment decision on social media hype or optimistic press releases is never a 
good call. Doing a lot of due diligence is, as always, absolutely essential.
Minerco Resources Inc (OTCMKTS:MINE) is another overly-hyped OTC stock that experienced a rather horrific drop during yesterday’s session. A third of the value was wiped out while the dollar volume at the end of the day stood at just over $4 million. Red Giant Entertainment Inc (OTCMKTS:REDG) too incinerated 33% of its market cap while shifting more than $1 million worth of shares.
