Force Protn Video (OTCMKTS:FPVD) Chopped in Half
Force Protn Video (OTCMKTS:FPVD) has got to be one of the worst performing OTC stocks out there. And in Pennyland, where double-digit drops are an everyday occurrence, this is quite an achievement.
The stock acquired its current ticker symbol in March, but active trading didn’t really start until the second half of July. FPVD was a wild ride back then. There were peaks of over $20 per share, but there were also dips of less than $10. It did manage to remain in the $12 – $15 range for a little while, but it quickly became apparent that consistently holding these positions will be impossible. After a few heavy blows FPVD found itself hovering around $2 and the disappearing volumes suggested that it’s about to spend some time there.
Yesterday, however, we witnessed a difficult-to-explain spike. All of a sudden, investors became extremely active and in a matter of six and a half hours, they traded nearly 100 thousand shares. Unfortunately, FPVD didn’t like the volume. Instead of going up, it crumbled and it closed the session with a price of just $1.07 per share (51% below Wednesday’s value).
As we mentioned already, finding the reasons for the sudden trading frenzy is quite difficult. The same goes for the crash. There aren’t any new press releases or filings that could cause the abrupt change in the market sentiment and there isn’t even a paid promotion. The crash did occur, however, and many people are wondering if it has actually created a buying opportunity.
Some will probably say that FPVD is headed by a person with plenty of connections and experience in the video surveillance industry. Indeed, Paul Feldman, the company CEO, spent quite a lot of time working for an entity called Law Enforcement Associates (once traded on the OTC under the LAWE symbol). FPVD‘s filings say that he helped LAWE grow quite a bit, but apparently, the board of directors decided at one point that he is no longer working in the company’s best interest and he was fired. The whole thing was followed by quite a lot of accusations and finger-pointing and it ended with LAWE’s bankruptcy.
At FPVD Mr. Feldman has quite a lot of work ahead of him. This point is hammered home by the 10-Q for the period ended July 31. It looks like this:
- cash: $3,165
- current assets: $57,370
- current liabilities: $22,525
- quarterly revenues: $15,935
- quarterly net loss: $53,042
These figures don’t really suggest that the stock should go much higher than $1 per share. In fact, some people aren’t ready to pay anywhere near that much.
These people agreed to invest some money in FPVD, but they did it at some pretty peculiar terms. First in March, they bought 100,000 shares at $0.50 per share and later they acquired a further 500,000 at just $0.10 apiece.
As you can see, the $100,000 that was raised during these placements was burned through quite quickly which means that FPVD was forced to look for different sources of financing.
The company went down the toxic debt route. The principal amount of the notes issued in August and September sits at $159 thousand and it is convertible into stock at a discount of 40% to the market price.
We’ll leave it up to you to decide what this could mean for the future stock performance
