HyperSolar (OTCMKTS:HYSR) Achieves A Major Milestone
Yesterday HyperSolar Inc (OTCMKTS:HYSR) published a new PR about the progress of the company in developing a low cost technology to make renewable hydrogen using sunlight and any source of water. In order to achieve commercial viability the company needs to achieve a voltage of 1.5V and for the past couple of years they have been steadily moving towards this goal. Now HYSR announced that they have reached the 1.4 volts milestone.
The news had an immediate effect and during the trading session interest in the stock skyrocketed. Over 15.3 million shares got traded while the previous session registered a trade volume of less than 900 thousand shares. The buying pressure pushed HYSR to a close more than 35% in the green at $0.0265. With the company getting closer to 1.5V and the stock surging up the chart it all sounds rather exciting. Before you pour your hard-earned money into the stock though you might want to take into account a couple of things.
HYSR’s stock has been following the same pattern for quite a while – it registers massive gains as a result of a new PR but almost equally as fast crashes down the chart. There is no shortage of reasons that could explain the stock’s inability to hold on to its gains. Let’s start with HYSR’s financials – the latest quarterly report covers the period ended March 31 and contains the following numbers:
• $7,784 cash and total current assets!!!
• $45 924 total assets
• $11.1 million total current liabilities!
• ZERO revenues
• $1.7 million net loss
The lack of revenues is not that surprising considering that HYSR are trying to develop new technologies but the rest of the financials are simply atrocious – almost non-existent cash reserves, massive working capital deficit of more than $11 million, and an accumulated deficit of $17 million.
The red flags don’t stop there though. In order to fund their operations HYSR have been taking on more and more convertible debt and as a result the dilution of the common stock has been significant. During the fiscal year ended June 30, 2014, HYSR issued 180 million shares at less than $0.0025 each.
Although since then the issuance of shares has slowed down the amount of shares that have seen the light of day as a conversion of debt is still alarming – during the 9 months ended March 31, 2015, 47.5 million shares were issued at an average conversion price of $0.0017 per share. At the end of March HYSR still had more than $560 thousand in convertible promissory notes so the issuance of discounted shares could continue for quite a while.
Even if you believe in the potential of HYSR’s renewable hydrogen fuel technology the risks around them are far too serious to be ignored. Take a look at the past chart performance of the stock and plan your trades accordingly.
