Health Enhancement Products, Inc. (PINK:HEPI) Shoots Up

HEPIChart.pngFor the most part of Friday’s trading session things around Health Enhancement Products, Inc. (PINK:HEPI) were quite calm and uninteresting. When suddenly, just before closing time they surged with more than 30% and closed at $0.4. That must make them pretty happy as this marks their 52 week’s high.

Initially HEPI‘s main focus was the production of ProAlgaZyme®, a freshwater infusion derived from an algae culture. They had established a manufacturing plant, which consisted of a laboratory and production facility supported by a hired production staff. The product had some limited success before they scrapped the whole idea in December 2011 when the management team changed. So for the past year they have been implementing a business model under which future income would be derived from licensing and selling natural bioactive ingredients.
As a result of the change HEPI‘s financial situation has gotten even worse. According to their 10-k report they had:
  • $47 thousand cash
  • $234 thousand total assets
  • $3 million total current liabilities
  • $3 million net loss
Seeing these numbers one may wonder what urged traders to rush in and buy HEPI‘s stock. There are two main reasons behind it.
First, the company managed to secure another loan with HEP Invesments, LLC evidenced by the latest 8-k filed with SEC. The total amount of the agreement is $3.75 million and as of April 16 around $2 million of them have been already advanced to HEPI. This sum will be able to ensure the continuance of their operations at least for now. 
HEPIlogo.pngSecondly, HEPI announced results of an ongoing bovine mastitis study employing isolated samples of their proprietary bioactive compounds. The statistically positive results are a huge boost and knowing that more than 10% of the nearly 244 million dairy cows worldwide are affected by the decease shows that the potential for revenues is really there.
The usual risks of most pennystock companies are also present here – HEPI has a vast amount of debt and any kind of stable income is still in the distant future. The ticker may be going up for now but it is not advisable to jump in blindly without doing your due diligence.

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