Intelligent Highway Solutions Inc (OTCMKTS:IHSI) Props Itself Up Again
About a month ago, Intelligent Highway Solutions Inc (OTCMKTS:IHSI) logged its first truly active session in a while. In a matter of six and a half hours, investors managed to trade nearly $340 thousand worth of shares and the stock gained a whopping 96%.
Something similar happened yesterday. The volume was big enough to place IHSI on the list of the most active OTC tickers for the day and the price went up by an equally impressive 75%. The only difference is, July’s jump left IHSI at a breath under $0.005 per share whereas right now, it’s sitting at $0.0007. So, what happened?
The report for the second quarter happened. If you take a look at our article covering the surge from a month ago, you’ll see that back then, shareholders and potential investors were quite eager to see the Q2 results. We tried to warn our readers that there can be no guarantees around the solidity of the figures in the 10-Q, but despite this, many people predicted some decent financials.
The 10-Q in question came out a little over a week ago and it showed those people how wrong they had been. Here’s a summary of the most important figures:
- cash: $8,401
- current assets: $137,440
- current liabilities: $3,164,609
- quarterly revenues: $8,612
- quarterly net loss: $1,338,958
Believe it or not, the atrocious balance sheet isn’t the 10-Q’s biggest problem. Neither is the drop in revenues which amounts to 98% and 95% on a year-over-year and a quarter-over-quarter basis, respectively.
The biggest problem comes from IHSI‘s horrifyingly toxic debt and the equally appalling dilution. Not much conversion took place during the second quarter which means that on June 30, the company owed $765 thousand in principal and $101 thousand in interest under various notes which were convertible into stock at discounts ranging from 35% to 52%.
Between July 9 and August 14 (a period of just thirty-six days), the note holders converted $246,235 worth of debt and interest into 269,037,466 shares of common stock. During the same period, the company issued a further $49,466 worth of new notes which are convertible at discounts ranging from 40% to 45%.
All in all, the convertible debt, coupled with the appalling results absolutely squashed the stock’s value and apparently, the management team decided that they need to comment on IHSI‘s situation. They said that they are disappointed, but not worried.
A private equity line was put in place a couple of weeks before the company published its 10-Q and the people at IHSI‘s helm reckon that with its help, they will be able to repay the rest of the convertible notes. Curiously enough, the equity line in question wasn’t covered by an 8-K form, but it is mentioned in the 10-Q. According to it, an unnamed investor will have the right to buy up to $5 million worth of IHSI‘s stock at a 30% discount.
The management team also talked about a distribution agreement in the works. It was finally confirmed yesterday when the company announced that it will soon start to offer a lightning system called Suncloak which, another press release from earlier today says, is very clever.
The press releases certainly sound nice, but isn’t it all too little, too late? And is selling stock at a 30% discount instead of converting debt at a 40% discount really going to make that much of a difference? That is up to you to decide.
About fifteen minutes after today’s opening bell, IHSI is sitting at $0.0008 (about 14% in the green).
