DHS Holding Co (OTCMKTS:DHSM) With Massive Gains and Volume

DHS Holding Co (OTCMKTS:DHSM) is a penny stock company that was incorporated about seven years ago. Until recently their primary focus was a website called SalesKing and although we scoured through a number of press releases, we couldn’t quite understand what it’s all about. Back in August 2012, DHSM announced that they are not really happy with the performance of their main business and they said that they are going to sell it. By October, however, they had changed their minds and a few months later, in February, they said that they are ready to launch a new business networking platform on the SalesKing website. Now, three months later, it’s still under construction.

SalesKing wasn’t the only business for DHSM. During the better part of 2012, they were spewing out press release after press release about the option acquisition of 40 acres of land near the border between Mexico and Belize. It was supposed to be used as the site for a huge shopping center and casino but, quite frankly, with DHSM‘s financials in mind, this project was bound to be dropped sooner or later. Sure enough, on April 9 they said that they have sold all the licenses.

Although DHSM failed spectacularly with the land-based casino, their urge for gambling have not died out and they are now talking about developing a virtual one. It’s called LuckyFoxCasino and aren’t they excited about it?

In January they said that they are going to launch the website on or before March 1, a date that turned out to be off by about 2 months and it actually went live on April 30. We checked it, we played some of the games while the boss wasn’t looking and we have to say that we’re impressed with the design. That, however, doesn’t necessarily mean that it will be a huge success. And if DHSM want to get out of the financial mess, it needs to be. The latest quarterly report that they have filed covers the period before March 31 and it contains the following figures:

• no current assets
• current liabilities: $356 thousand
• no revenue since inception
• quarterly net loss: $344 thousand

With these financials in mind we really wondered how they managed to pay for the creation of the website and the software platform. Apparently, we weren’t the only ones asking questions and on Friday DHSM issued a press release in which they explained that LuckyFoxCasino is indeed owned by one of their subsidiaries and they cleared the suspicions around the fact that the footer of the website quotes Soft Bet Limited as the license holder. Minutes after the PR went live, a frenzy of trading ensued and by the end of the day the volume had reached 135 million shares and the ticker had gained as much as 88% in terms of value. This could mean only one thing – investors seem to like the idea of the LuckyFox online casino and DHSM have gained their trust for now. Until we see the figures in the next financial statement, however, we can’t say for sure if the shareholders have a real reason to be happy.

Speaking of shareholders, they have not had it easy so far. When you take just a quick look at DHSM‘s chart, you will see that the ticker has been slowly, but surely sliding down towards the bottom of the chart. This is partly due to a host of paid promotions that DHSM have had in the past, but most of the losses are caused by the catastrophic dilution.

A quick look through the official filings reveals that at the end of March 2012 the number of outstanding shares was 119 thousand. By September 2012, this number had increased by around 18 thousand (137 thousand) and as of March 31 the outstanding stock amounted to 395 thousand. Not long after the report was published DHSM increased the number of authorized shares from 500 thousand to 2 billion and they issued quite a lot more stock. According to the OTCMarkets profile, the number of outstanding common shares as of May 15 exceeds 1 billion. Unfortunately, we’ve no idea why so many shares were issued in such a small time frame, but one thing is for sure – if the trend continues, the ticker will get even closer to the ground and the trust that DHSM managed to gain will soon be gone.