Top Ships Inc. (NASDAQ:TOPS)
Following their February 17, 2017 earnings release, TOPS shares rocketed and nearly broke through the $5 mark. Top Ships Inc. (NASDAQ:TOPS), since then, slid to nearly touch $1 – until this morning. On massive volumes, TOPS shares are up over 100% in early morning trading.
The average daily volume for TOPS shares is just over 600,000. However, this morning, less than an hour into trading, more than 13.5 million shares of TOPS have traded hands. Top Ships Inc. (NASDAQ:TOPS) closed Wednesday at $1.05 then gapped up to open at $1.15 and have reached an inter-day high of $2.50.
The unusual price and volume activity could be a result of information gleaned from their annual report which was filed with the SEC yesterday. In it Top Ships Inc. (NASDAQ:TOPS) discloses: The following transactions were entered into by the Company and with an unrelated party, Kalani Investments Limited (the Investor)…
This is highly noteworthy as Kalani is the mysterious entity behind some clever, and highly criticized, financing arrangements with DryShips Inc. (DRYS). DRYS shares are down 99.85% YTD.
The annual report continues:
On February 2, 2017 the Company entered into a Common Stock Purchase Agreement with the Investor, for the sale of up to $3,099,000 of shares of the Company’s common stock that the Company may sell from time to time to the Investor, over the next 24 months. In accordance with this Common Stock Purchase Agreement the Company issued 22,835 common shares as a commitment fee to the Investor. As of March 10, 2017, the Company has sold an aggregate 1,054,842 shares of its common stock to the Investor under the Common Stock Purchase Agreement, with the aggregate gross proceeds from the sale of $1,773.
The Annual Report continues about a Convertible Note deal with Kalani Investments:
On February 14, 2017, the Company entered into a securities purchase agreement with a non-affiliated non-US investor affiliated with Kalani, pursuant to which the Company sold 7,500 Series C convertible preferred shares to this non-affiliated investor for $7,500, which are convertible into a number of the Company’s common shares equal to the quotient of $1 divided by the lesser of the following two prices: (i) $3.75 and (ii) 75% of the lowest daily VWAP of the Company’s common shares over the 21 consecutive trading days expiring on the trading day immediately prior to the date of delivery of a conversion notice, but in no event will this conversion price be less than $0.25. In accordance with the sale of Series C convertible preferred shares the Company issued 72,910 common shares as a commitment fee to the non-affiliated investor.
The amount of dilution DRYS shareholders have experienced over the years can be generously deemed as “epic”. One can only wonder if the appearance of the mysterious Kalani Investements in the annual report of Top Ships Inc. (NASDAQ:TOPS) has a similar effect on TOPS shares.
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.
About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.