Borislav Tonev

Provision Holding Inc (OTCMKTS:PVHO) Elbowing its Way Up

by Borislav Tonev March 28, 2016

Provision Holding Inc (OTCMKTS:PVHO, PVHO message board) went up from just over $0.08 per share on February 10 all the way to last Thursday's close of $0.24. That's an appreciation of around 186% in a matter of just a month and a half and during that period, the ticker also logged one or two even more impressive peaks. There are a few reasons for the rather incredible climb.

First, you have the press releases. There's been quite a few of them and they all sounds rather good. Last week, for example, PVHO announced an agreement with a company called GRI Marketing Group which should give advertising revenues a boost.

Speaking of revenues, on February 16, PVHO also filed its 10-Q for the last three months of 2015. It showed that at the end of the year, the company had:

  • cash: $2.9 million
  • current assets: $4.6 million
  • current liabilities: $8.4 million
  • quarterly revenues: $2.2 million
  • quarterly net loss: $603 thousand

The sales are up both on a quarter-over-quarter and on a year-over-year basis, and as we all know, penny stock investors love to see increasing sales. What's more, there's about $2.5 million in unearned revenues which could make the financial statement look quite a bit better in the future.

The press releases and the revenue jump certainly helped PVHO attract many buyers, but these weren't the only things pushing the stock along. There's also been quite a lot of promotional activity.

It all started on February 10 when Stock Beast and its affiliated newsletters launched a one-month pump campaign on the ticker. Once it expired, some smaller outfits were called in to help tout PVHO.

The pumpers' presence is a bit worrying because while they do sometimes help a ticker gain some ground in a short period of time, the newsletters rarely excel at keeping penny stocks up for long. When there's a considerable amount of convertible debt outstanding, the threat of an unexpected drop is even more substantial.

Sure enough, once you go through the 10-Q carefully, you'll see that during the last six months of 2015 alone, PVHO issued more than $3.8 million worth of notes convertible at a fixed price of $0.10 per share. There's some more debt convertible at $0.06 and one note can be turned into stock at a 30% discount to the market price.

The threat of so many cheap shares hitting the open market makes PVHO a rather risky choice. Make sure you act accordingly.

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