Can VHGI Holdings Inc (PINK:VHGI) Get Back Up?
Well, by the looks of things, yes, it can. Just about an hour into the trading session the ticker is moving in the right direction and VHGI Holdings Inc (PINK:VHGI)’s shares are already 25% more expensive compared to yesterday’s closing price of $0.068 and while you can never be certain when it comes to penny stocks, we’re quite sure that VHGI‘s long term shareholders will have a much more enjoyable weekend if this trend continues.
Especially considering the fact that the last couple of days have been quite hard for VHGI. Despite the fact that both the long-term stock holders and the potential investors seem to be quite excited about the company and the news that they published at the beginning of the month, VHGI lost 7% of their value on April 16, followed by a 22% fall on April 17 and yesterday, they were pushed a bit further down when they stopped at a price, 2% lower compared to the previous close.
Today, the positivism around VHGI is back. However, as we wrote in our previous articles about them, we are still not too sure about a couple of things. The main problem for us is the lack of up-to-date information. The latest VHGI financial statement was published on December 18 and it covers the third quarter of 2012. Since then, we saw a couple of 8-K forms, and a notification of late filing that was filed on March 28 and stated that the long awaited annual report, will be published by April 12 (15 calendar days after the NT-10K). Now, 22 calendar days later, we are still waiting for the results.
In effect, VHGI‘s shareholder have been deprived of up-to-date financial information for almost 5 months. As for the most current report – the one covering the three months that ended on September 30 – the figures aren’t terribly convincing. We read through it and we saw that VHGI had around $52 million worth of working capital deficit, a quarterly net loss of more than $2 million and revenues that are simply not enough to convince us of their long-term success.
On the PR front, though, everything looks bright. VHGI announced yesterday that they have engaged the services of a new investor relations firm called KSCA Strategic Communications, and if we are to believe the words in the press release, KSCA are just as confident of VHGI‘s success as everyone else.
And yet, we’re still not so sure. Back on April 1 they mentioned that they have begun some serious shipments of tonnes of coal and that the next big one will be on April 10. Since then we have seen no press release about the speed of the coal deliveries or their completion. It somehow seems illogical that VHGI failed to update their shareholders on these developments considering the fact that during the last couple of weeks, the excitement around the ticker has been massive. An announcement of successful shipments would have blown the share prices sky-high.
Another thing that we’re not 100% sure about is the massive issuance of shares that has been going on throughout the years. While the acquisitions of the CEO’s companies could become a huge sources of revenue for VHGI, the amount of preferred shares, warrants and options that were issued is so huge, that if Mr. Paul Risinger decides to convert all of them, he will need to quadruple the number of authorized shares. The preferred stock means that he can do that without asking the shareholders although we’re pretty sure that if they have a say, they would probably vote against it.
Indeed, the announcements from the beginning of the month suggest a bright future for VHGI, and if they turn out of be true, quite a lot of people could profit big time from the ticker. As of right now, however, the Limited Information badge on their company profile on the OTC Markets website seems to describe the situation quite well.
