OSL Holdings Inc (OTCMKTS:OSLH) Dragging its Way Up Again
OSL Holdings Inc (OTCMKTS:OSLH) announced their joint venture and licensing agreement with Cheryl Shuman just over a month ago. The press release didn’t give too many details on what the new partners are actually going to do together, but even so, it caused quite a stir among investors.
A few weeks later, on April 20, the company filed its 10-Q for the period ended February 28, and it showed us that there’s been a 103% increase in sales on a year-over-year basis. On April 22, the management team announced another agreement which should mean that even more products will pop up on the shelves of their Go Green Hydroponics store in California.
Thanks to all of this, OSLH was transformed from an illiquid God-forsaken stock into one of the most heavily traded OTC tickers out there. And it still holds this title. Tuesday’s session, for example, saw more than 28 million shares changing hands which pegged the dollar volume at just under $420 thousand.
The volumes are undoubtedly impressive, but unfortunately, the same can not be said about the stock performance. Once the Cheryl Shuman announcement came out, a lot of people, Ms. Shuman included, tried to spread the word around. This dragged OSLH out of the sub-penny levels and flung it as high as $0.02. Unfortunately, it then ran out of steam and it slumped back down to less than a penny. It has managed to regain some of the lost ground over the last few sessions, and it’s currently sitting at $0.0139, but even so, it still has a fairly long way to go until it reaches the heights from a couple of weeks ago. The question is: Can it do it?
Sadly, while there is no shortage of hype around the deal with Ms. Shuman, there’s also plenty of problems. The revenue jump, for example, is commendable, but it alone can not be enough to support the stock for long. And the rest of the financials are not really all that impressive. Here’s what the 10-Q looks like:
- cash: $118 thousand
- current assets: $1 million
- current liabilities: $7.6 million
- quarterly revenues: $1.2 million
- quarterly net loss: $3.1 million
The financial problems are pretty obvious – there isn’t a whole lot of cash, the debt is quite devastating, and the losses are disturbing. The company’s future depends on OSLH‘s ability to solve all those issues and you have to decide for yourself whether the management team can pull it off. There’s another thing you need to worry about. And it’s quite big.
The number of issued and outstanding shares grew from less than 395 million on January 9 all the way to nearly 642 million on April 14. In other words, the stock was diluted by 62% in a matter of just over three months. One of the main reasons for the horrific dilution is – yes, you guessed it – toxic debt.
Between October 21, 2014 and February 28, 2015, OSLH retired $480,814 worth of convertible notes with the issuance of 78,138,503 shares which brings the average conversion rate down to just $0.006 per share. Then, between March 1 and April 10, a further 176,059,251 shares saw the light of day in order to satisfy $149,757 worth of debt which means that the conversion rate is even lower – $0.0008 per share.
The humongous amount of discounted stock is exerting quite a lot of pressure on OSLH and if you think that the dilution is now over, you might want to check out two more things. The first one is the amount of convertible debt still outstanding, and the second one is this Schedule 14 form which tells us that the number of authorized shares could be increased to nearly 2 billion in the very near future.
