Vuzix - What the hell happened on Thursday?

If you're holding or watching Vuzix, which trades under the symbol VUZI, then you no doubt saw the wild trading that took place on Thursday September 28th.

The stock opened down at $5.60, but that was nothing compared to what was coming.  The stock crashed and traded as low as $4.10 inter-day, but by the close it recovered to the opening price of $5.60 for a 5 cent drop from the Wednesday close.  

Quite the roller coaster, or more like that drop zone amusement ride maybe...or better yet a bungee jump.  

Social media sites like StockTwits were rife with speculation as to the cause.  Some thought it was a bear attack, others put the blame on manipulation dropping the price so that accumulators could take out stop losses.  There were all manner of theories, and I can imagine it was probably a bit nerve wracking for some shareholders.  I figure there had to be some big players involved, the volume of almost 1.5 million is almost ten times more than the daily average for the preceding three months.

Of course assuming there were some big players working their magic, I don't expect they'll be announcing anything.  Don't expect to see some Hedge Fund type issuing a PR saying:

********************

Fake News Wire (FNW) September 30th 2017:

We at Bogus Hedge Fund were responsible for the increased volume and volatility in the trading of VUZI shares on Thursday Sept 28th.  We engaged in what is commonly called a "Bear Raid" by borrowing as many shares as we were able and dumping them back into the market.  

This had the desired effect of having the share price fall significantly and we were then able to cover our short by taking out stop loss orders and other sell orders from nervous shareholders scared by the rapid fall we engineered, thus covering our short and realizing a nice return on our little gambit.

********************

Mind you, if a PR like that does in fact come out...just remember, you read it here first at Avoid The Bag.  

Vuzix may have been the target of such a bear raid, there's no way to know.  It is after all an incredibly risky stock given the amount of money they're burning through as evidenced by their 20 year history and accumulated deficit of over $85 million up to June 30th of this year.  

http://ir.vuzix.com/financials

Dilution is continually happening, after effecting a 1:75 reverse split share consolidation in February 2013 the number of issued shares was reduced to roughly 3.5 million as of May 15, 2013. But as of the most recent 10Q filing for the period up to June 30th the total outstanding shares had grown to over 20.6 million.  That was before yet another share offering for 1.5 million more shares.  

And then of course there is Intel which holds 49,626 shares of Series A Preferred Stock.  Each of those Series A Preferred shares is convertible into 100 common shares, meaning if Intel opts to convert and sell them, then there would be even more dilution to the tune of 4,962,600 more shares.  At this rate it might not be long before yet another reverse split is needed if they want to stay listed on the Nasdaq rather than going back to the OTCBB and Vancouver Exchange where they started.

Those who've already read the filings know the Pro Forma Book Value as of June 30th was only $0.71 per share of common stock, and just $0.44 cents on an as converted basis with the Series A convertible shares.  If you've missed that information you can get it from the filing here:

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12224119&RcvdDate=8/10/2017&CoName=VUZIX%20CORP&FormType=424B5&View=html

So what happened Thursday?  Was it hedge fund type games, or maybe Intel converting and disposing of its shares, or something else all together?  Who knows...but the fundamental picture remains scary to my eyes.  

I am aware that there are a lot of people seeing Rainbows and Unicorns in the future.  All I will say is wake me when the dream becomes reality, or maybe the Rainbow and Unicorn types are the ones who are asleep and dreaming.  

Comments always welcome, but no profanity...the word "hell" in the subject line of this posting is about as far as I will allow.  

Resverlogix to attend BioPharm America 2017 Sept 26 and 27 in Boston

Resverlogix has posted to its website, on the Media Events page, that the company will be attending Biopharm America in Boston on September 26th and 27th of this year, just over a week from now. Look under "Current Events" about half way down the page:

https://www.resverlogix.com/media/events.html#.Wb32pMiGPIU

Biopharm America is in its 10th year and is described as unique partnering event which brings together hundreds of executives from: Venture Capital, Major Pharma, Academia and all manner of Biotech Firms from start ups to developed companies with drugs on the market.

Biopharm America uses "PartneringOne" a software platform that allows participants to tailor one on one meetings specific to their needs.  The two day conference features leaders and executives from across the spectrum of Life Sciences.  Some big players slated to be in attendance include AstraZeneca, Bayer, Genentech, Merck, Pfizer and many more. 

As a Resverlogix shareholder who's very hopeful for the success of Apabetalone, the company's lead compound currently in Phase III trial, it is certainly encouraging to see the company busy and getting out to an event such as this one.  

BUT PLEASE TAKE NOTE, THERE IS A VERY REAL POSSIBILITY THE COMPANY MAY SKIP THE EVENT WITHOUT GIVING SHAREHOLDERS ANY NOTIFICATION!!!

I realize that might come as a shock to some, that a public company would publish on the world wide web its attendance at a major conference, and then not show up without prior notification.  But it is something that has already happened twice this year, most recently at the Rodman & Renshaw Investor Conference in New York City on September 11th.  The other time was in May at BioEquity Europe in Paris.  

In both cases the company published on their website attendance but then cancelled without providing any notification to shareholders ahead of the fact.  In the most recent case I communicated with IR at Resverlogix and was informed via email that the Rodman & Renshaw cancellation was due to a scheduling conflict, but no details were provided as to the nature of the conflict.  

I am pointing this out because if the company skips out again without prior notification I don't want my readers to accuse me of knowingly putting out false information.  I prefer to be proactive rather than reactive, and knowing the company's history of skipping investor conferences and such without notification I feel it behooves me to at least warn readers that it is a possibility.  

I am hopeful however that if, (for any reason) the company does decide to skip BioPharm America, that now they will notify stakeholders before the fact and not after.  I will be checking their media page frequently to see if the event is still listed and will leave a comment on this blog posting if I notice that it suddenly disappears.  

But to reiterate, I am hopeful the company will be proactive going forward.  I base that hope on a conversation I had with Resverlogix's VP of Investor Relations this past Friday. During that conversation I went through something of a laundry list of items where the company's communications were severely lacking in my view, some of it very basic stuff.  

On top of the two investor conferences that were skipped the company had published a Power Point with missing agenda items, and another with the wrong debt figure and share totals.  Then most recently on September 13th just passed the company put out a PR which said the company's most recent quarterly statements and MD&A were available on the company's website....they were not. Thankfully late on the afternoon of Friday September 16th, (after my conversation with IR) they were finally posted to the site.  Better late than never. 

IR acknowledged the importance of projecting a positive corporate image and of professionalism in the company's communications.  After all Resverlogix has a value statement on their website that says they're committed to "timely and transparent communications".  

Going forward I expect nothing less.  

Vuzix - Mega deal or just mega hype?

On August 14th just passed Vuzix, in tandem with Cyber Timez, announced a purchase authorisation from the Wounded Warrior Program to assist veterans with low vision and blindness.

It sounded great, and on the surface it looked great.  Who doesn't want to see wounded veterans getting the help they need, be it due to reduced vision or for any other reason.  And being a well known orginization like Wounded Warriors, it certainly seemed like a big deal.

For those unfamiliar the Wounded Warrior Project is very well known, with over a dozen programs to help veterans in need.  You can check out their website here:

https://www.woundedwarriorproject.org/

Back in May of 2017 the Wounded Warrior Project announced a partnership with OrCam to provide smart glasses to a blind veteran, here's that article:

http://newsroom.woundedwarriorproject.org/2017-05-18-Wounded-Warrior-Project-Partners-With-OrCam-Congressman-to-Help-Blind-Veteran

That's pretty damn awesome.  Vuzix should be proud to be part of this program.  But wait....uhm, this isn't the Wounded Warrior organisation referenced in Vuzix's news.  It seems there's more than one. In fact there's quite a list:

http://www.military.com/education/timesaving-programs/wounded-warrior-programs.html

Looking through those programs I can't seem to find the one Vuzix and Cyber Timez are involved with.

Okay here we go.  It seems the U.S. Army has its own official program, the "Army Wounded Warrior Program" or AW2 for short.  There are over 20,000 severely wounded, ill, and injured soldiers enrolled in the Army's official program.  You can read about it on Wiki:

https://en.wikipedia.org/wiki/Army_Wounded_Warrior_Program

That's still pretty damn awesome, and great news that Vuzix and Cyber Timez would be involved with this orginization.  Uhm....wait again.  This isn't the Wounded Warrior Program Vuzix is involved with either.  Turns out there's at least one more.

Okay...here we go, found it at last.  Wounded Warrior Program, here's the link....this is the one, it has to be because its linked in the PR Vuzix put out:

https://www.wounded-warrior-programs.com/

Alrightee, I finally found the right charity they're teamed up with.  Some readers might want to make a charitable contribution.  Oh wait....my bad, its not a charity.  

Well, its all good....if they can outfit some wounded veterans with glasses that improve their quality of life, its all to the good.  Whether this is a mega deal or just mega hype, time will only tell.  Do note that Vuzix in their PR put out a "target" for the number of veterans that might be furnished with their smart glasses.  However as any long time Vuzix investor or watcher knows, targets are frequently not met.

Best of luck.

Vuzix - Does fundamental performance even matter? (VUZI)

Over on stocktwits where I post with the username "growacet" I made a comment about $VUZI and was asked by another participant:  "Where's the pump"??

I should probably thank "wallstpirate" because he provided me with some fodder for something to write about.  I've been posting less than usual here at ATB after all, and inspiration is always welcomed.

So...where's the pump with Vuzix?  Where do I begin?

Let's start with smallcapnation.com which discloses an expectation of $15,000 from a third party for increasing awareness of VUZI.  Here's the link disclaiming the compensation:

http://www.smallcapnation.com/vuzix-corporation-vuzi-disclaimer/

Then there's Tailwindsresearch.com which has published 20 bullish articles distributed both on their site and at SeekingAlpha.com  If you're looking for several hours of bullish sounding material on Vuzix, fill your boots:  http://tailwindsresearch.com/vuzix/

Their disclaiming statement says they "may have been compensated" with the usual boiler plate language about their write ups being for informational purposes only etc.  You can read it all here:

http://tailwindsresearch.com/disclaimer/

I could go on and on of course, ceolive.com, integraconsulting.com and more but I think readers get the point.  Bearish short side website thestreetsweeper.org asserts that at least 21 professional campaigns have been used to promote Vuzix.

http://www.thestreetsweeper.org/undersurveillance/Vuzix_Corp___VUZI___Let_The_Caterwauling_Begin

All the promotion, pump and hype is fine of course, but the important question is....What does it all mean?  What it means is that Vuzix is showing up on a lot of radar screens, investors who might otherwise have never heard about this company have been introduced to it.

Nowhere on any of these sites however do I see the writers advising potential investors to read over the company's SEC filings, except perhaps buried in the disclaiming statements, typically using a nice small font.  

But then, do the fundamentals even matter when a company is relying on pump and promotion to attract investors?  Promoters always talk about the future, that's what investing is ultimately all about of course.  I have little doubt that the AR space is going to be big, just like there was little doubt that web based commerce was going to be big back in 2000.  

There were some heavily pumped and promoted stocks back then too, Pets.Com springs to mind and others like Digiscents might ring a few bells for those who are older.  For every amazon and netflix that made it big there were hundreds that simply rode the wave of excitement, their stocks were hyped up and the printing press churned out shares as buyers couldn't get enough tech.

Is Vuzix using a printing press?  Are they constantly printing more and more shares?  Judge for yourself.  Back in February of 2013 the company did a 1 for 75 share consolidation.  Simply put, shareholders got one share for every 75 they owned.  Someone who owned 75,000 before the reverse took place had 1,000 afterwards.

You can read about it here:  http://ir.vuzix.com/press-releases/detail/584/vuzix-announces-reverse-stock-split

Of course that was over 4 years ago now.  What has happened since?  If you check the 10Q filing for the period ending March 31st 2013 you'll see that the number of shares outstanding was 3,536,856 as of May 15 2013.  If you don't want to be bothered looking up the filing yourself here's the link so you can verify the numbers: 

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=9299013&RcvdDate=5/15/2013&CoName=VUZIX%20CORP&FormType=10-Q&View=html

Fast forward to the most recently available filing, the 10Q for the period ending March 31st 2017 and you'll see that the number of outstanding shares has ballooned to almost 20.5 million, 20,408,926 to be precise as of May 10th 2017.

Here's the link to that filing:   

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12056450&RcvdDate=5/10/2017&CoName=VUZIX%20CORP&FormType=10-Q&View=html

That's an increase of 16,872,070 shares in four years.  That would have been over 1.2 billion more shares if not for the 1:75 reverse split and represents and increase of  477%.  If Vuzix keeps it up, at this rate they'll be pushing 100 million shares within the next 4 years.  100 million is a bit problematic, because according to their filings that's the amount they're authorized to issue.  But if they ring the bell again they could always do another big reverse split I assume.

But in the near to medium term it might not matter.  There are lots of companies that get pumped and promoted.  CYNK communications is one of my favorites, it went from a nickel to over $20 despite $0 revenues and having only one employee.  CYNK billed themselves as a social media company, in spite of not even having a website.  It didn't matter though, and it proves that no matter how bad a company is, if the promotion is good...there are always fools around willing to pay an inflated price.

That's it for now.....I might get a few comments, so I'll remind haters that profanity is verboten here. And I'll also disclose the fact that I have no position in VUZI long or short, so no skin in the game whatsoever.  If I do take out a position however I can state with near 100% certainty that it will be on the short side.

The next quarterly filing should be out soon, and we'll know how much more money was lost and how much higher the accumulated deficit has climbed.  And of course how many more shares were printed.  

Peace out.

Contrarian lessons from comedian Ron White (PPHM)

Applied learning happens when a person takes knowledge acquired from one area and adapts it to a different situation.  I'm going to stretch that concept to the limit by suggesting that those who aspire to being true contrarians, that they could learn something from a routine done by comedian Ron White of the Redneck Comedy Tour.

To be a contrarian means to swim against the current, to be bold  and buying when others are scared, and to run for the exits when everyone is rushing in to buy.

Easy to say, not so easy to do though.  The herd doesn't panic without a reason.  When investors start storming out of a stock there's typically some news that spooks them and starts the stampede. With PPHM that news was the release of their fourth quarter and fiscal year end results up to April 30th 2017.

The company reported higher than expected losses and the stock tumbled in after hours trading.

https://finance.yahoo.com/news/peregrine-pharmaceuticals-reports-financial-results-201402620.html

So what does this have to do with a routine by redneck comedian Ron White?  Check out this video of an old bit he did and  then I'll explain.

That's an abbreviated version, but it makes the point.  Ron is describing a flight where there's engine trouble, forcing his plane to return ten minutes after taking off.  In the full version he describes the aircraft as being as big as a pack of gum, with a velocity that's twice the speed of smell....so slow that they get passed by a kite.

That's not a bad metaphor for a highly speculative stock like PPHM and thousands of others.  If you're going to hop on board a plane like this, you best not be a nervous flyer.  Mr. White though, he has the perfect attitude for someone flying on a small plane or for someone investing in speculative stocks.  

When an announcement is made that the plane has lost oil pressure in one of the engines, while everyone else is nervous....Ron, who's been drinking since lunch, doesn't care.  "Take her down", is his remark..."And hit something hard, I don't wanna limp away from this piece of crap"!!!  

I would argue that's a wise approach with development stage companies that have not yet attained, and may never attain, profitable operations.  Obviously there's going to turbulence, "engine problems" and plenty of bumps and jolts.  If you're going to be "losing your mind" like the young passenger next to Ron White in this little scenario....then maybe its best not to get on the plane in the first place.  

You see it in social media all the time when bad news hits....posters come out of the woodwork moaning and bitching.  No doubt many are disgruntled shareholders upset that their speculative little stock hasn't graduated to inclusion on the S&P 500 index.  

But I sometimes suspect that there are others who are actually buying, and merely looking to influence others into giving up their seats. Buying because they're confident that the plane will right itself and not crash.  It could be hedge fund type players planning on promoting the stock later in my opinion, perhaps knowing that while the past isn't pretty, that there's some positive news coming down the pipe that could get investors excited and buying again.

On the other hand, if social media is full of pump and promotion despite crappy performance...."Don't worry about those results, just wait til next quarter, or next year".  When I see an abundance of that type of activity....as Scooby might say "Rut Roh".  

Not a strategy for the faint of heart though....if you're playing with money you can't afford to lose, to extend the metaphor...plane crashes do happen.

PPHM has had its share of turbulence certainly, in early 2016 they halted a phase III trial which sent the PPS crashing from a split adjusted price around $7 to less than $3....those who gave up their seats to buyers lost out on the climb back above $5 though.  

Now financial results up to April 30th have seen the PPS fall back below $5 to somewhere around $4.50 in after hours trading.  So what does the future hold?  Is it time to panic and get that parachute out?  Or is it better to sit back and enjoy that scotch?  Those results are almost 3 months old of course, the calendar I use says its the middle of July and not April.  

Perhaps you've heard that old saw about the CEO asking his CFO..."How do the numbers look"?  The CFO then says..."How do you want them to look"?  

Anyway me and my friend Johnny Walker know what we'll be doing....take her down, go ahead....cause we don't care, we're just gonna sit back and enjoy the ride.  All you nervous types read the disclaimer at the very bottom of this blog site, actually everyone should read it whether they're nervous or not.  

Peace out.

ACU.V - Nobody ever went broke taking profits

I haven't written anything on Aurora for a while, however if anyone is still following this blog...I think there are at least 3 dedicated readers....I thought it best to disclose that I've closed out my position.  The reason is because it looks to me like the dinner bell may be ringing calling the herd to the trough.

With that being said its entirely possible and probably likely that there's still more upside left, and perhaps some significant upside.  But as it says in the subject line right at the top, nobody every went broke taking profits.  I first established a position in ACU.V at 15 cents and then averaged it down to 12.5 cents.  If the PPS climbs to 40 or 50 cents...or more, then I'll just cry into the money I made.

Best of luck

Short attack on Resverlogix (RVX.TO - RVXCF) But did they overplay their hand?

Shareholders and watchers of RVX and RVXCF have seen the stock tumble precipitiously in the wake of a financing deal first disclosed after the bell on Thursday June 8th.  The following day the company announced financing of up to $10 million dollars CDN through the issue of units consisting of one share and one warrant with the price being $1.80 and with the warrants priced at $2.05

Details here: https://ca.finance.yahoo.com/news/resverlogix-raise-10-million-135000624.html

Prior to that news coming out the PPS had closed at $2.05 CDN on Thursday June 9th.  Then the slide in the PPS began, by the time Friday's trading had closed RVX had closed at $1.64 on the TSX. More alarming was the volume, in spite of trading typically coming in around 30,000 per day that Friday saw over 1 million shares trading hands.

A casual observer might think that shareholders had bailed out on the financing news en masse, but that would be a mistake.  And that wasn't the end either, the PPS has continued falling ever since settling at a close of just $1.33 CDN on Tuesday June 20th for a drop of 35% from before the financing was announced.  

So what caused the fall?  A look at the just updated short interest gives the answer.  Short sales which had totaled 229,700 up to May 30th 2017 exploded higher to 841,500 current up to June 15th, that's an increase of 611,800 between May 30th and June 15th.  Obviously borrowing over 600K shares from investors and then dumping them back into the market, that's going to have an incredibly negative impact on the PPS, especially in a thinly traded and tightly held stock like RVX.

Now I have a lot of respect for those with the willingness and capacity to short a stock trading for a piddly $2.00 or so Canadian.  This is not an activity engaged in by individuals trading from a laptop and risking their child's college fund.  To short a stock like RVX in these numbers requires a significant bankroll.

But perhaps, just maybe....it could be that players on the short side of RVX have overplayed their hand in my opinion.

Why?

The company just attended the Bio International Convention in San Diego on June 19th.  They did a presentation, and the PDF of the Power Point slide show was made available just afterwards. Investor website Seeking Alpha picked up the slide show and published it on their site, you can see it here.

https://seekingalpha.com/article/4082752-resverlogix-rvxcf-presents-bio-international-conference-2017-slideshow?auth_param=eu09k:1ckj4s5:b13d93e3c0b94713711ac454bdbeaf27&uprof=46&utoken=6a477500ce9e1f7eb73a9eb082babcbb

Take note of the debt figure on page 5 of the slide presentation.  Investors and followers of the company should already have been aware of the company's debt, pegged at $68.8 million CDN and owed to CitiBank.  The loan is collateralized by a standby letter of credit from Eastern Capital Ltd which is the investment arm of billionaire Kenneth Dart, a well known and successful BioTech investor and heir to the Dart Container fortune.  

The stand by letter of credit though has a catch, if Resverlogix were to default on the loan, then Eastern would get pretty much all the company's intellectual property, including the patents on their lead compound Apabetalone currently in a Phase III trial called BETonMACE.  And the loan comes due this coming August, which isn't far off.

It has long been my opinion that this loan has been an albatross around the company's neck, and a significant factor in depressing the share price of RVX, preventing the company from attaining a substantially higher PPS, that is my point of view.

But back to the PowerPoint published by SeekingAlpha.  The debt figure increased, instead of $68.8 million the new figure is $117.6 million CDN, a difference of almost $50 million.  

This sent my wheels spinning obviously.  The most logical conclusion from my perspective was that the company had either extended the CitiBank loan or replaced it.  I considered it possible that they had raised enough to retire the $68.8 million CitiBank loan, and to tap into and additional $48.8 million which is sorely needed by the company to finance trials and continue operations.  

Well, those thoughts were quickly replaced by bewilderment when the company changed the Slide Presentation available on their own website and put the debt figure back to $68.8 million CDN on the updated link.  You can see the newer version here: 

http://www.resverlogix.com/upload/media_element/281/02/bio-international-2017-v2.pdf

I sent an email to the company's IR seeking clarification.  It wasn't just the debt level that changed, but also the MC and the number of shares outstanding, both issued and fully diluted.  The answer I got back was even more confusing with the head of their IR department claiming it was the result of a typo.  

A typo???  Cambridge Dictionary defines a typo as a "small mistake in a text when it is typed or printed".  That's something everyone has done, typing there when using the possessive form instead of their, or your instead of you're.  But calling a difference of almost $50 million dollars and differences in the number of shares outstanding a "typo", that doesn't add up.  That's like calling Mount Everest a little hill.  

I don't know what happened, but I am more than a little bit skeptical of the "typo" story.  I think its possible that the $117.6 million debt figure is based on something tangible but not yet final.  That is a suspicion on my part, and something I do not expect confirmation of at this point.  If however the company announces a new loan agreement that comes anywhere close to that new figure, then I'll be almost certain of it.

And finally, if that weren't enough we have the NYTimes reporting on the Trump Administration's new draft order which seeks to ease restrictions on Drug and Biotech companies.  Adam Feuerstein of TheStreet.com just tweeted this saying:

Biotech and drugs stocks are going to triple in price tomorrow.

All of them.

https://twitter.com/adamfeuerstein/status/877335651825270786

Exciting times, exciting times.  But I won't be watching the market tomorrow, I'll be visiting the Zoo on what promises to be a spectacular day.  Please note, I'm just a retail schmo...albeit one with some industry experience to go by, but still just a retail investor.  And I am a shareholder in Resverlogix so my opinions are obviously biased.   Please read the full disclaimer at the bottom of this site.