Investors See a Light at the End of Pervasip Corp (OTCMKTS:PVSP)’s Tunnel
On June 29, Pervasip Corp (OTCMKTS:PVSP)’s CEO, Paul Riss, wrote a letter to the shareholders and said that his plans of improving the balance sheet, tidying up the share structure, and generally turning the company into a more appealing investment opportunity are coming along nicely. Considering the 10-Q for the three months ended February 28, this statement seems somewhat strange.
The report shows, for example, that PVSP ‘s financial shape wasn’t exactly healthy four months ago. In fact, the balance sheet is absolutely terrible:
- cash: $2,623
- current assets: $219,788
- current liabilities: $12,177,301
- quarterly revenues: $894
- quarterly net loss: $1,989,982
The pitiful cash reserves and the atrocious working capital deficit speak pretty well for themselves. And the 99.6% year-over-year revenue drop doesn’t suggest that things are getting better.
Mr. Riss’ claim that he has done something to improve the share structure also seems a bit odd. As we have discussed numerous times on these pages, PVSP is riddled with convertible debt which is being turned into shares at a discount. Between November 13, 2014 and June 8, 2015, for example, the O/S count grew from less than 1.2 billion all the way to more than 4.7 billion. 1.1 billion of the newly printed shares saw the light of day at an average rate of less than $0.00009 per share (that’s right, four zeros) during the three months ended February 28 and between March 1 and June 8, a further 1.3 billion shares were issued as a conversion of debt at an undisclosed rate.
Based on this, you’d be forgiven for thinking that Mr. Riss was a touch too optimistic when he said that his restructuring plans are coming together. That said, a few other things might suggest that some improvements are indeed being made. Last week, for example, Mr. Riss proudly announced that PVSP has completed the acquisition of Plaid Canary Corporation – an established holding company that is supposed to bring in quite a lot of revenues. As for the dilution, Mr. Riss said a few months ago that an entity called FLUX Carbon Corporation, the former owner of Plaid Canary and a controlling shareholder of PVSP, has agreed to absorb the dilutive impact of the remaining convertible notes.
Investors apparently reckon that this is exactly what the company needs to get itself out of the mess and they are in a hurry to buy as much shares as possible. Only two red sessions were registered over the last two weeks and after smashing out of the triple-zero range, PVSP quickly gained enough momentum to help it break above the $0.002 mark.
Apparently many people reckon that with Plaid Canary on board and with FLUX Carbon taking one for the team, things will soon take a turn for the better. But how likely is this to happen?
We’re about to find out. We must point out, however, that if you do a simple Google search, you’ll see that Plaid Canary Corporation, the company that is supposed to give PVSP‘s revenues a massive boost, appears to have no internet presence whatsoever outside yesterday’s press release.
We should also say that FLUX Carbon Corporation, the entity that is supposed to protect PVSP‘s shareholders from the devastating dilution, is run by Kevin Kreisler. And he certainly knows a thing or two about dilution.
In December 2014, Mr. Kreisler took the helm at a penny stock company called Greenshift Corp (OTCMKTS:GERSD). When he was appointed as a CEO, GERSD‘s O/S count was hovering just above the 100 million mark. Six months later, it exceeded 1.6 billion. As you might have guessed by the fifth letter of the ticker, GERSD is now going through a 1 for 100 reverse split which, by the way, is the sixth in the company’s history.
Should this scare you away from PVSP? Not necessarily. You should probably give it a thought, though.
