Borislav Tonev

Textmunication Hld (OTCMKTS:TXHD) Wobbles About

by Borislav Tonev February 25, 2016

We've seen some interesting action around Textmunication Hld (OTCMKTS:TXHD, TXHD message board) recently. After an excruciatingly long period of hibernation, the ticker was woken up at the beginning of the month. The volumes increased and more people started paying attention. The performance is not what you'd call consistent. On Monday and Tuesday, for example, the ticker dropped from more than $0.12 all the way to $0.075, but yesterday, it bounced seemingly out of nowhere and it stopped at $0.096 per share.

So, there are buyers and there are people who reckon that TXHD is finally about to make a name for itself. Hopefully, they will turn out to be right.

The company has been toiling away with its current marketing business for quite a while now, but it's fair to say that TXHD isn't exactly an industry leader. Here's what the latest 10-Q looks like:

  • cash: $7 thousand
  • current assets: $15 thousand
  • current liabilities: $1.6 million
  • quarterly revenues: $80 thousand
  • quarterly net loss: $924 thousand

In a letter to the shareholders, Wais Asefi, TXHD's CEO, tried to convince everybody that things will look quite a bit different in the future. He said that he has reduced the O/S count by about 300 million, he announced that some serious sales initiatives have been undertaken, and he said that the acquisition of a minority stake in Aspire Consulting Group will provide the company with numerous growth opportunities.

There's nothing wrong with being optimistic about the future and there's nothing wrong with people trusting you with their money. We can't help but notice, however, that Mr. Asafi failed to say anything about the toxic debt that has been plaguing the company for so long.

You can read through Note 6 of the latest 10-Q and you can see for yourself just how many convertible notes are threatening to bring a massive wave of dilution. What we'll tell you is that over the last fourteen months, about $55 thousand worth of principal amount and interest has been turned into just over 13.3 million shares which brings the average conversion rate down to around $0.004 per share.

If those hit the open market, Mr. Asafi's shareholder letter might not be enough to support the ticker close to the $0.10 per share mark.

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