Triple 000 and Sub-penny Chart Plays

[trader53]

HJOE - The HJOE Hangover

Written
by Janice Shell

http://www.theotc.today/2015/05/the-hjoe-hangover.html?m=1

HJOE - The Elliott Wave 5-Waves Sequence
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=117248796

May 11, 2015

Hangover Joe's Holding Corporation (HJOE) had quite a week.

On Monday May 11, 2015,
the company's stock opened at $0.0004 and closed at $0.001;
on Thursday, it hit a heady intraday high of $0.0062
on 532 million shares, only to fall back to close at $0.0024

The increased interest in the issue
seemingly came out of nowhere.

Only a little less than three weeks ago,
HJOE was trading in the low triple zeros
on average volume not much greater
than 10 million shares daily.

What on earth had happened ?

Toxic financing

The quarterly makes clear that HJOE's financial condition
much to be desired.

At the end of September,
the company had a working capital deficiency of $2.704 million, and an accumulated deficit of $6.284 million.

It reported a net loss of approximately $592,000 for the period, and relied on debt financing and private placements of its common stock to fund operations.

Due to a lack of liquidity--another word for money--
it had defaulted on some of its debt agreements and a licensing agreement struck with Warner Brothers for use of promotional materials having to do with the movie The Hangover.

The sales of convertible notes are particularly troubling.
HJOE is in hock to nearly every major toxic funder out there,
and to some minor ones as well. Though most of the individual loans are relatively small, as of early 2015, more than $700,000 in convertible notes was outstanding, and additional financing was needed. Some, but not nearly all, of that debt has been converted, but more has been incurred.

The gigantic increase in the authorized
was obviously necessary to accommodate conversions.

On February 23, 2015
HJOE followed through by amending its articles of incorporation in Colorado to reflect the change.

The raise in authorized capital came just in the nick of time.

On March 20, 2015,
a new lender, Joshua Sason's Magna Asset Services, Ltd.,
entered the picture.

In his Schedule 13G,
Sason indicated that he potentially controlled 9.99%
of the company's common stock,
and reported that the current shares outstanding were 1,747,702,984

The outstanding had grown
by a little more than 1.4 billion shares
between the beginning of December and the end of March.

That is dilution on a staggering scale.

(Note that Magna, as a new lender,
hasn't converted his note yet.

His position "consists of Common Stock that the reporting person has the right to acquire by way of conversion of promissory note(s)." Typically, note holders don't convert until their stock can be issued free trading.)