Intelligent Highway Solutions Inc (OTCMKTS:IHSI) Crashes On Record Volume

Last Wednesday Intelligent Highway Solutions Inc (OTCMKTS:IHSI) announced a new distribution agreement with Suncloak Lighting Systems. The news was enough to propel the stock of the company 75% up the chart to a close at $0.0007. On the next day IHSI published another PR disclosing the specifications of the Suncloak’s grow light system. This time, however, the press release failed to have a similarly positive effect. In fact, the exact opposite happened and IHSI crashed by 28%.

On Friday the company suffered an equally depressing drop as it slashed another 20% returning to $0.0004 per share. During the session investors shifted the unprecedented for IHSI amount of 354 million shares. The monthly average for the ticker stands at 66.68 million shares.

Although the crash was severe it definitely wasn’t a total surprise – IHSI is simply riddled with red flags. The company filed its financial report for the second quarter of the year on August 19 and even the CEO said that the results for the period were “disappointing”. Well, that might be an understatement because as of June 30 IHSI had:

  • $8,401 cash
  • $137 thousand total current assets
  • $3.16 million total current liabilities
  • $8,612 revenue
  • $1.3 million net loss

The revenue for the quarter is minimal but in order to generate even that amount IHSI actually incurred cost of goods sold of $10,033. This means that the company finished the period with a gross loss of $1,421.

If you thought that things couldn’t get much worse, well, think again. As of May 20 IHSI had 51 million outstanding shares. Three months later and now the company had over 400 million outstanding shares, an increase of over 680%. 269,037,466 of the newly issued shares saw the light of day between July 9 and August 14 as a conversion of notes. The company still has a lot of convertible debt left not to mention that during the same period IHSI issued another $50 thousand worth of new convertible notes.

On August 6 IHSI entered into a $5 million credit line and at least some of that amount will be used to pay down the outstanding convertible notes. That may not necessarily mean an end to the dilution though. According to the quarterly report under the terms of the deal the company has the right to sell up to $5 million of its common stock over a period of 24 months. The sales price of the stock will include a 30% discount from the average of the lowest two closing bid prices in the preceding five trading days.

Currently sitting deep into the triple zero price ranges IHSI’s stock is extremely volatile. Even if a new PR manages to once again push the ticker in an upwards direction the multitude of red flags could quickly depress it back down. Do extensive due diligence and adjust your trades accordingly.

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