Provision Holding Inc (OTCMKTS:PVHO) Takes A Step Back

Three solid sessions of gains helped the stock of Provision Holding Inc (OTCMKTS:PVHO) climb from an opening price of $0.31 on April 18 to a close at $0.375 on April 20. Yesterday, however, the momentum behind the stock disappeared completely and as a result, in just a single session, nearly all of the gains were erased. The stock crashed by exactly 12% and was sitting at $0.33 by the time of the closing bell. Currently PVHO commands a market cap of over $25.6 million.

Such a valuation could prove to be unsustainable for a lot of the other pennystock companies but PVHO‘s financials are actually not that bad. According to the quarterly report for the period ended December 31, 2015, back then the company had:

• $2.86 million cash
• $4.58 million total current assets
• $8.36 million total current liabilities
• $2.2 million total revenues
• $600 thousand net loss

As we said, the balance sheet boasts some rather encouraging numbers with sizable cash reserves and revenues that have grown both on year-over-year and quarter-over-quarter basis. Despite the sizable increase in the reported revenues the net loss for the quarter didn’t go down. In fact, the opposite has happened with the $600 thousand from the quarterly report more than tripling the net loss for the same period in 2014.

PVHO definitely have an exciting product – the company develops and sells 3D holographic display systems and just over a week ago it announced a new 66-inch tall 3D Savings Center platform. Last month the company began the manufacturing of the next batch of 310 3D Savings Center kiosks, which, upon completion, will bring the total number of produced kiosks to 1000.

Jumping into the company without doing the necessary due diligence could prove to be rather risky, though. In the second half of 2015 PVHO raised over $3.8 million in proceeds through the sale of convertible notes. According to their terms these notes can be converted into common shares at just $0.10 per share, price that is more than three times lower than the current market price of the stock. In addition, for each $1000 in convertible notes warrants for the purchase of 2000 common shares with an exercise price of $0.15 per share were also issued. In January, this year, PVHO sold another convertible note in the amount of $262,500.