All a company has to do these days, to become one of


Red Hots, is to somehow align itself with

Red Hat


, which makes software for the Linux operating system. Which is just what


(VONE) - Get Report

did yesterday when it announced the "availability" of new Internet security software that it says has "compatibility with Red Hat."

The news caused V-One's stock to leap 279%, giving it a total market cap of $230 million. That's 279%, or an additional $169 million in market value, for a company that did little more than issue a news release!

If that doesn't underscore the insanity of how far this momentum mania has gone, maybe a peek at V-One's fundamentals will. (Like fundamentals mean anything, right?!) This, after all, is a company whose revenue last quarter fell by roughly half from a year earlier.

But wait, there's more: This is the same V-One that hasn't made a dime since going public in 1996, and as of last quarter had a deficit of $36 million. This is also the same V-One whose independent auditors,


, last December issued a "going concern" opinion because it didn't meet the


$4 million tangible net asset requirement to stay on the

Nasdaq National Market

. The company was then relegated to the

Nasdaq SmallCap Market

, but was warned its listing there was contingent on showing net tangible assets of $6.3 million. (Sorry, can't explain why SmallCap requires more than the big-cap.)

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That "going concern" opinion apparently didn't go over too well because at the end of last quarter V-One fired PricewaterhouseCoopers and hired

Ernst & Young

. No reason was given, but such changes often occur after a company gets an unfavorable opinion from an auditor -- and they're not generally considered a good omen.

But wait, there's more: To get its net tangible assets up to snuff, so it could remain listed on


Nasdaq market (and to help it stay in business), the company issued 3.3 million warrants to several undisclosed investors, via a private placement, to buy V-One stock. The warrants can be converted at any time once the price rises above 2 5/8.

Such a deal: Not only did the stock rise high enough yesterday for those warrant holders to cash it all in for a tidy profit, it did the same thing after a similar Red Hat-related announcement two months ago, only to lose




gain. Any bets on history repeating itself?

V-One's appointed spokesman didn't return my call.

Calling all Questions

Have a personal finance question? Don't hesitate to send it our way to Our only request: Include your name. Because of volume, we can't guarantee personal replies to questions that aren't answered in the column. And please, no questions regarding brokerage disputes, or seeking advice or opinions regarding individual stocks.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.