Vertical Computer Systems Inc. (OTCMKTS:VCSY) Appears to be an Internet Sensation
As we wrote yesterday, there has been quite a lot of buzz around Vertical Computer Systems Inc. (OTCMKTS:VCSY) over the last couple of days. Monday, Tuesday and Wednesday saw some really strong volumes and a solid performance price-wise. The ticker even reached $0.10 per share for the first time in more than three years on Wednesday but the really surprising thing was, VCSY‘s run was not aided by any news or paid promotions.
In fact, the management team have been eerily quiet about their operations – according to the company website, they have published only one press release throughout the first ten months of 2013 and while the licensing deal announced on October 1 does indeed sound interesting, we doubt that it was having an effect on the price a full week later.
As you might imagine, we also opened the latest financial statement to see if the reason for the rally is hidden somewhere in there, but if you check them out, you’ll see for yourself that the figures in it, don’t really inspire too much confidence. As of June 30, the company had just $36 thousand in cash (they had $111 thousand at the end of Q2 of 2012) and $480 thousand in current assets (a reduction of around 28% year-over-year). Worst of all, VCSY have around $13 million (a figure that has hardly changed since 2012) in current liabilities and with the rest of the numbers in mind, we’re struggling to see how they will manage to pay the debt off over the next twelve months. Yes, they are generating revenues, but we’re not seeing any growth worth talking about and although the net loss has been reduced since last year, there is still quite a lot of it.
It’s clear that none of the things mentioned above pushed the price to the $0.10 range. The only thing that could have propelled VCSY to such heights is the legal actions that they have taken against some quite big companies. We wrote about them yesterday and if you have seen our first article, you know that there’s not a whole lot of information about the lawsuits available on the Internet. Speculations around the message boards suggested that an important hearing is about to take place soon, but unfortunately, we could find no confirmation of the rumors.
Today, we dug a bit further but we still couldn’t find any meaningful dates, court rulings or documents related to the cases. We did, however, find that VCSY is quite a hot topic around the Internet. Special websites and forums have been created that have become the venue for many heated discussions on the company’s advantages and disadvantages. As always, opinions range from negative to positive (sometimes overly optimistic) and you can check them out and decide for yourself if the company and the pending legal actions really hide the potential profit some of the people on the Internet are talking about.
While you’re at it, you shouldn’t forget that VCSY is a small cap company that is taking on the big boys and their big legal teams. Worlds Inc (OTCBB:WDDD) is another OTC venture that is trying to sue a large enterprise in the face of Activision Blizzard, Inc. (NASDAQ:ATVI), but it’s pretty clear that the case isn’t really helping with the stock performance.
Will the same thing happen to VCSY? We’ll see, but we should point out that yesterday ended with 7% in losses and early trading today doesn’t look particularly good.
Other tickers that drew in quite a lot of attention yesterday are Bio-Matrix Scientific Group, Inc. (OTCMKTS:BMSN) who gained some ground after a positive press release hit the wire and Sauer Energy, Inc. (OTCMKTS:SENY) who failed to sustain a more prolonged run.