Hypersolar Inc (OTCMKTS:HYSR) Wipes Its Gains
For years Hypersolar Inc (OTCMKTS:HYSR) have been inching close and closer towards the goal of 1.5V, the minimum voltage needed for commercially viable real world applications of the company’s system that can produce renewable hydrogen using sunlight and any source of water. This Tuesday they finally did it – HYSR announced that they have reached 1.55 volts.
Such a major announcement for the company did not leave investors apathetic. On the contrary, HYSR registered its biggest daily volume since July 2014 of over 24 million shares. The intense trading resulted in an equally impressive price gains of nearly 50% with HYSR closing the trading day at $0.032. Yesterday however, on the very next day after the PR, the stock got devastated wiping the majority of its gains and closing 26.5% in the red at $0.0235. So, why did the positive momentum generated by the announcement last for only a single day?
Well, for quite a lot of reasons actually. Let’s start with the financial state of the company. The years of development without any significant revenues have taken their toll on HYSR‘s balance sheet. According to the latest quarterly report as of March 31 Hypersolar had:
• $7,784 cash and total current assets!!!
• $45 924 total assets
• $11.1 million total current liabilities!
• ZERO revenues
• $1.7 million net loss
By the end of September HYSR should submit their annual report and investors will learn if the financials have continued to deteriorate in the recent months. The report will also show if the convertible debt of the company has increased – at the end of March there were around $560 thousand outstanding convertible notes.
This leads us to the dilution of the common stock. During HYSR‘s fiscal year ended June 30, 2014, approximately 180 million shares were issued at an average price of $0.002 each. In the next nine months 45 million new shares were issued at $0.0017. Even after yesterday’s crash the people who received these shares could reap massive profits if they unleash them on the open market.
The fact that HYSR are still not ready with the development of their light driven hydrogen generation particles with the company now focusing its efforts on increasing the hydrogen production efficiencies of these particles undoubtedly contributed to yesterday’s disastrous session.
HYSR are moving forward with their plans but unfortunately the red flags surrounding them remain as serious as ever. Trading the stock should be preceded by extensive due diligence and careful planning.
