Thinspace Technology Pump Enters Fourth Month
We’ve received a number of emails lately asking for our opinion on Thinspace Technologies (OTCQB: THNS). The tiny company with a market cap of $27 million is a self-proclaimed global provider of cloud computing solutions.
But I hate to break it to you… this penny stock appears to be the subject of a pump and dump campaign.
Our sources show that various promoters have sent out more than 60 emails since early March to pump up the shares of THNS. What’s more, it looks like a good number of these penny stock hypesters have been paid around $250,000 for their efforts.
And if you look at a chart of THNS, you’ll see it has been behaving like a pump and dump stock…
As you can see, THNS nearly quadrupled intraday when the campaign began in early March. And after a brief pullback, the shares moved up over the next couple of weeks to a high of 95 cents.
At that price, the stock had gained 280%.
However, that’s when the dumpers stepped in and began unloading their shares. After a month-long decline, the stock changed hands last week for just 22 cents per share – below where it was trading immediately prior to the campaign.
THNS had lost a whopping 78% of its value in short order.
But by the end of the week, some pumpers were going back to the Thinspace well for another drink. These unrelenting optimists are calling for a “massive reversal” in the shares and perhaps another rise to the 99 cent level.
While it remains to be seen how effective this new round of pumping will be, the stock has already moved up to the 30 cent per share level. It certainly looks like more than a few promoters are making a concentrated effort to resurrect THNS.
But that’s not all…
The company bears other characteristics of a pump and dump.
First off, Thinspace is the result of a reverse merger that occurred in December 2013 between Vanity Events Holding, VAEV Merger Sub, and Thinspace UK. The shareholders of Thinspace UK now own a majority of the company’s voting power and have assumed operational, management, and governance control.
Second, the company’s financials paint a very different picture than the one presented in the flurry of press releases that has accompanied the stock promotion campaign.
The company calls itself a “leading player in application delivery, virtualization, and cloud technology markets.” But check out this data from the most recent annual report…
As of December 31, 2013, the company had $341,000 in cash versus a working capital deficit of $13.3 million. It presently does not have any other available credit, bank financing, or other external sources of liquidity. And the company’s ability to continue as a going concern depends entirely on it obtaining additional funds to continue operations.
So, how has the company been funding its operations?
You guessed it… “equity and debt financings, along with advances from related parties.”
In fact, the company is party to 18 convertible notes with an aggregate outstanding principal balance of $1,173,825. And the company owes $209,972 in accrued and unpaid interest on these notes.
What’s more, 16 of the notes are convertible at discounts of between 75% and 90% to the market price of Thinspace’s common stock.
No question about it, the holders of these convertible notes certainly stand to benefit from a sharp rise in the price of THNS. And a rising stock price would likely make it easier for Thinspace to raise the millions of dollars it needs to keep the company going.
Last but not least, Thinspace has retained RedChip, a small-cap research and investor relations company, to further promote THNS. Is this another piece to a carefully orchestrated promotion campaign puzzle or is it just a fortuitous coincidence?
We’ll let you be the judge.
Bottom line…
We recommend you avoid trading penny stocks that are the subject of a promotion campaign like THNS. If you already own the stock, you should consider selling into the latest pump-inspired rally. You never know when the bottom is going to drop out of a promoted penny stock, but you can be reasonably sure that it will at some point.
Profitably Yours,
Robert Morris
Category: Penny Stocks
