After posting incredible gains on Tuesday’s trading session, Propanc Health Group Corp (OTCMKTS:PPCH) slid back into red territory on Wednesday’s trading session. The ticker opened in the green and made a high of $0.04 but retreated back to close at $0.0189. The trading volume for the session was more than 100 million, much higher than the 30-day average volume of less than 3.5 million.
The financial performance
If the latest financial report of Propanc is studied, there seems to be no reason for the sharp surge in prices as recorded earlier in this week. A little more than two months ago, Propanc merely had 14,600 cash, $1.9 million of total current liabilities and $53,000 worth total assets. The company posted zero revenue, and net loss was $345,000. The total net loss for 2H2014 stood at $1.12 million with a working capital deficit of almost $1.8 million and an accumulated deficit of $18 million. The financials of Propanc do not inspire much confidence.
The red flags
Apart from dismal financial performance, there are several other red flags associated with Propanc. The company issued millions and millions of cheap shares recently. As per the company’s report, Propanc has almost 82.5 million outstanding shares, as of October 31, 2014. The number of outstanding shares surged to 191.6 million by February 16, 2015. The report suggested that on February 4, 2015, approximately 50 million shares were issued to Propanc’s directors at a price of $0.0025 each.
Reduction in liability
The report also indicates that Propanc had to issue shares as a settlement agreement. The Propanc Health Group Corp (OTCMKTS:PPCH) issued more than 15 million shares for cutting back $52,907 in the owed liability. At the end of September 2014, the debt settlement required to be paid in stock was $951,000. Now, the company announced the convertible notes that provide their owners an opportunity to receive shares at a huge discount.