Vapor Group, Inc. (OTCMKTS:VPOR) Suffers Further Corrections
At the end of April Vapor Group, Inc. (OTCMKTS:VPOR) may have officially received their new symbol and turned from SPLI into VPOR but the change wasn’t nearly enough to reverse the negative trend of the company’s stock. At least now the drop happens at a slower rate – yesterday they wiped another 6% and closed the session at $0.105 nearly 76% lower than the highs posted in March.
Although these days the marijuana industry as a whole has been slowly but surely seeing less and less attention from investors the marijuana vaporizers and e-cigarettes sector has been able to keep traders interested. Thanks to this despite the depressing performance of its stock VPOR has consistently been placing among the top traded pennystocks.
As we said in our previous articles the company’s consolidated fundamentals don’t look so bad showing that the private company that carried the business was even able to finish 2013 with a positive bottom line:
• $48,000 cash
• $940,000 current assets
• $855,000 current liabilities
• 1.9 million revenues
• $160,000 net income
• $940,000 current assets
• $855,000 current liabilities
• 1.9 million revenues
• $160,000 net income
On May 6 VPOR announced that they have closed a purchase agreement which brought another $1.25 million in fresh funds, further strengthening their fundamentals. The problem is that the deal was done with Hover Holdings, an affiliate of one of the most notorious toxic funders in pennyland – Magna Group.
According to the terms of the agreement VPOR sold four convertible promissory notes that have a fixed conversion price of $0.15, which is considerably higher than the current market price of the stock. Although the deal will undoubtedly cause more dilution at least for now investors won’t have to worry as the notes cannot be converted in the next six months.
What is a great cause of concern though is the fact that VPOR have agreed that if in six months their stock is not trading at prices above $0.18 they will be considered in default of the convertible notes. Six months are certainly a lot of time and if VPOR are able to show some encouraging results they may be able to return to such price levels. For now though investors will have to wait at least one more week for the financial report for the first quarter of 2014 to be filed.
Another factor that could be detrimental to the positive movement of the stock is the past history of their CEO Mr. Dror Svorai who has 3 criminal offences and 12 tax liens among various other cred flags.
With the impending FDA regulations on the sector VPOR remains a risky choice that demands extensive due diligence before any trades with their stock are attempted. Two other pennystocks that operate within the same industry also suffered corretions during yesterday’s trading. Vapor Hub International Inc. (OTCMKTS:VHUB) kept almost all of the price gains from Tuesday after they slid down by just 2.3% and closed at $0.58. mCig inc.(OTCBB:MCIG) on the other hand dropped for a second day in a row after losing 5.5% of their price and ending the session at $0.45.
