Hybrid Coating Technologies Inc (OTCMKTS:HCTI) Hits Another 52-Week Low
A small development stage sub-penny OTC company and a Fortune 500 giant – a match made in heaven. Does this sound like daydreaming to you? Everybody is entitled to their own opinion, but Hybrid Coating Technologies Inc (OTCMKTS:HCTI) have been trying to convince us over the last few months that such a symbiosis really is possible.
First announced in April, the partnership between HCTI and the unnamed Fortune 500 entity is stronger than ever and it could potentially bring the small OTC venture as much as $20 million in revenues per year. At least that’s what a press release from last week says.
Investors, however, aren’t entirely sure. The PR did give the stock a boost on November 3 and HCTI even tried to flirt with the $0.002 per share mark. Momentum was lost rather quickly, however, and after three consecutive red sessions, it logged a 52-week low of $0.0011 and it stopped at $0.0012 per share.
In light of the massively positive news, this seems rather strange but once you take a closer look, you’ll see that investors are right to be cautious. All the talks about tens of millions of dollars in revenues sound good, but the reality is, HCTI‘s latest 10-Q is an absolute nightmare:
- current assets: $428 in cash
- current liabilities: $6,683,989
- quarterly revenues: $1,712
- quarterly net loss: $1,317,808
The figures don’t really need any further comments, but the management team don’t appear to be too scared by the woeful financials. They said in the 10-Q that they expect to have “significant sales by the end of 2015”. Whether this will happen or not is for time to tell.
It must be said, however, that even if HCTI manage to log some meaningful revenues before the end of the year (and some people believe that they will), this might not be enough to negate the effects of the toxic debt and the truly appalling dilution it has brought. The company started the year with just over 44 million shares issued and outstanding, but during the next nine months, it raised the authorized capital not once but twice. At the same time, numerous conversions at 40% to 50% discount to the market price brought the O/S count to more than 372 million.
On November 20, it was sitting at a whopping 704 million thanks to 331 million shares that got issued in a matter of a little over a month and a half. Of those, 215 million saw the light of day as a conversion of debt at an average rate of $0.0012 per share. For the record, during the same month and a half, HCTI hovered between $0.008 and $0.0018 per share.
