You'll often hear bulls advocating that a company's past performance has no relevance, citing the oft repeated line that "its all about the future". And usually they'll be talking about a company that is in a hot sector, or one that is expected to be hot. And typically the reason they recommend ignoring past performance is because the company they're bullish on has a bad history. And this is doubly true when you're talking about OTC penny stocks.
But wait, Vuzix which trades under the symbol VUZI, it isn't an OTC penny stock, it trades on the Nasdaq and shares are currently trading for around $8 per. This is true....but.
VUZI "was" an OTC penny stock until January of 2015 when it uplisted to the Nasdaq exchange. How does a penny stock get off the OTC market and onto the Nasdaq? An investment by Intel helped the company meet the capitalization requirements of the exchange, and a 1:75 reverse split announced in February of 2013 helped them attain the minimum bid price requirement.
VUZI ended 2012 trading around $0.05 cents per share. On February 6th 2013, after the 1:75 share consolidation the PPS closed at $6.38 or about .08 adjusted for the consolidation.
As of November 19th 2012 Vuzix had over 265 million shares issued and outstanding according to the company's SEC filings. After the 1:75 share consolidation that number was reduced to a little over 3.5 million as reported in the firm's March 2013 10K.
Was Vuzix's history of issuing shares about to come to an end?
In October of 2013 they announced receiving funding from DARPA and the shipment of optical systems to the U.S. military.
That's one thing that appears to be pretty much a constant with Vuzix, (that along with dilution of course), a seemingly unending supply of exciting and bullish sounding news that continues right to the present day.
Of course it seems the DARPA funding wasn't sufficient as the company revealed in its November 2013 10Q filing that outstanding shares had grown to over 9.5 million, more than doubling where they were after the recent reverse split.
And so it continued. By April 9th 2014 the number of shares had climbed to 10.2 million. By November 2014 over 11.1 million, and over 15.8 million by March of 2015. As of August 15 2016, as per the most recent 10Q filing the number was up to over 17.3 million. We'll see if the dilution continues in the filings to come.
Since effecting the 1:75 reverse split, with every 75 shares of VUZI becoming 1 share post consolidation, VUZI has gone from about 3.5 million shares to over 17.3 million, almost a 500% increase. Adjusting for the reverse split that equals roughly 1,035,000,000 pre consolidation shares....over 1 billion.
After almost 20 years, coming up on their 3rd decade of existence as a company....some seem to be expecting this leopard to change its spots. Not me though, that's why I took out a position on the short side when VUZI was trading north of $9 at the start of September.
However I fully expect there to be promotional outfits touting an investment in Vuzix, and social media pumpers galore using any port in a storm to encourage buying and holding tight. And I further expect them to all be saying that the past doesn't matter, but then its always thus with penny stocks...and while the 1:75 reverse split may have helped them get off the OTC I for one won't be shocked to see them back on the pink sheets in the future.
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