AXIOLOGIX INC (PINK:AXLX) Continue the Upward Trend
That’s right, after doubling the price per share during Wednesday’s trading session AXIOLOGIX INC (PINK:AXLX) gained another 40% yesterday. The volumes that we see are also quite impressive. Wednesday saw 384 million shares change hands, while yesterday they registered another 225 million. As of the time of writing, a further 36 million shares have been bought and sold and there’s still a lot of time until the closing bell.
The promotional emails stopped a while ago and there hasn’t been any new grandiose press-releases since the one that caused a big stir on Wednesday. OTC Markets announced that AXLX will now be listed in the Pink Current tier which is a good thing to hear, but we are still a little apprehensive and we’re not quite ready to trust them 100%.
We have outlined the reasons why we are dubious and the most important factors for us are, as always, the terrible financial state in which the AXLX are in at the moment and the lack of actual profit. As we mentioned in our first article, their technology is not that revolutionary, either. VoIP has been around for decades now and people are using these services every day for all sorts of purposes and, most of the times, for free. We just can’t see the enormous potential profit that both AXLX and the pumpers are talking about. A point illustrated by AXLX‘s latest financials:
- cash: $2 thousand
- current assets: $656 thousand
- current liabilities: $1.3 million
- revenue (June – November, 2012): $294 thousand
- net loss (same period): $1 million
You can see for yourself that even if the customers with pockets full of money do magically appear from somewhere, AXLX will have a lot of work to do, minimizing the operating expenses. If they want to become a profitable venture, that is.
The way they treat their shareholders doesn’t suggest that they really want to be successful, though. In both our previous articles we mentioned that investors have been crushed especially during the last year and there really is little excuse for the random issuance of shares. For example, when they set off to acquire their main operating subsidiary – Axiocomm, they issued a mind-boggling 1.15 billion shares. That is quite a lot of dilution for a venture that is yet to yield a single cent in profit.
And we all know what happens to companies that don’t turn any profit – they just die out. A classic example of this is Vitamin Blue Inc (OTC:VTMB) who also tried to ride he promotional wave. Inside Bulls were part of the action as well, just like in the case of AXLX. The fact remains, however, the VTMB just had very little to show and, in the end, it disappointed quite a lot of investors.
This goes to show that an investment in a company that relies on hype alone is extremely risky. Yes, there are opportunity for profit, but more often than not, they are too narrow and you really have to play your cards right. That’s why it’s extremely important to weigh the risks carefully before jumping in.