Is The Excitement Around Intelligent Highway Solutions Inc (OTCMKTS:IHSI) Fading?
The stock of Intelligent Highway Solutions Inc (OTCMKTS:IHSI) was experiencing a rather dramatic fall down the chart dropping from close to $0.005 to $0.0013 in just 9 sessions. However, when on August 6 the company announced a $5 million private equity line the news propelled the ticker over 30% in the green on a record for IHSI volume of 126 million traded shares.
Many investors thought that the company was finally on its way to a more prolonged recovery but unfortunately that is not what happened and on the very next day IHSI crashed by nearly 12% to a close at $0.0015. So why is a $5 million funding that according to the PR has no downward convertible mechanism unable to push the stock up for more than a day?
Well, there are several reasons that could explain the depressing chart performance. Although IHSI are among the pennystock ventures that are capable of generating revenues their financials remain far from encouraging. The quarterly covering the first three months of the year contained the following numbers:
• $37,832 cash
• $303,340 current assets
• $2,228,602 current liabilities
• $183,274 revenues
• $438,598 net loss
The entire amount of the reported revenues came through a purchase order from Honeywell International Inc. (NYSE:HON) who hired IHSI to install a temperature control system and associated sensors in a state owned office building in Alameda, California. With the purchase order now completed the company will have to look for new clients.
At the same time the common stock of IHSI seems to have been severely diluted. At the end of March there were over $500 thousand in outstanding convertible notes. And it seems that quite a lot of shares have indeed been issued because as we said earlier the daily volume on August 6 surpassed 126 million shares while as of May 20 IHSI reported total outstanding shares of a little less than 51.5 million. Investors should keep in mind that on May 14 the company increased its authorized shares from 130 million to 500 million.
By the end of the week IHSI should submit their next quarterly report and what investors find inside is more than likely going to determine the direction of the stock. If there is a substantial amount of convertible debt still outstanding the potential dilution could be enough to depress the ticker despite recent financial injection. That is why you should do your own due diligence before committing to any trades involving the stock.
