As we move inexorably toward 2021, there are several themes that should strike the diligent eye of the astute investor: money creation, central bank activism, the discovery of the “fiscal channel” in policy operations, and the coming impact of covid-19 vaccines.
Wrapped in all of these conceptual narratives is Bitcoin, with its newfound sheen of legitimacy following moves by major payment platforms (the key to this puzzle) to invest in the digital currency. As a result, the crypto space has been on fire from any reasonable perspective.
But there are very few small and micro-cap investment plays available to the quote-unquote “normal” investor. The point: while Bitcoin has doubled over the past couple months, market participants are sure to be searching for instruments that can offer them much bigger returns over the near term on a proxy basis relative to the coin.
That’s why we are taking a closer look today at ISW Holdings Inc (OTCMKTS:ISWH), a company that has strong momentum in two major growth trends and has now established a strong anti-dilution program that deserves a close look.
The key here is that ISWH has laid down a recent track record of success in its telehealth and home healthcare segment and is verging on a breakout in commercial-stage operations for its cryptocurrency mining segment, producing what may be a major topline growth story now and throughout 2021.
The Real Meal Deal
ISW Holdings Inc (OTCMKTS:ISWH) isn’t a pretender in the Crypto space.
The company has made a significant investment in developing the Proceso Pod5ive datacenter pod, which is capable of driving Megawatt-level cryptocurrency computational mining power, has been fully assembled and is now ready for shipment to the 100 MW renewable energy Bit5ive LLC cryptocurrency mining project based in Pennsylvania.
“The job now is about bringing in revenues from participation in the Bit5ive Pennsylvania project while simultaneously building a track record for the Proceso, Pod5ive Data Center Pods as a global best-in-class solution for mining facilities around the world,” remarked Alonzo Pierce, President and Chairman of ISW Holdings.
“We have begun sourcing partnerships in this endeavor, and we feel our technology division has an extremely bright future ahead in step with the growing success of Bitcoin and the broader cryptocurrency space.”
While it apparently has an industry leading Power Usage Effectiveness (“PUE”) score of 1.06, and while Bitcoin has thundered higher, ISWH is still a micro-cap trading on the OTC, which means it will take work to drive it into the slipstream of the current bull market’s energy. OTC stocks don’t get “the benefit of the doubt”. They have to earn it.
But ISWH may be on that track.
Shoring Up the Sheet
But there’s another important dimension to note: as we approach that key moment where the company’s “pod5” crypto mining solution goes live and starts churning out mining revenues and then starts to attract interest as a product in the mining equipment space, the company has also recently taken another big step: streamlining its capital structure by curtailing dilution risk, canceling debt, and reducing outstanding shares by a substantial margin.
To wit, in ISWH’s most recent release: the company announced that it and its largest noteholders have reached an agreement whereby about 50% of the current convertible debt owed by the Company will be exchanged for restricted preferred equity, eliminating a significant portion of the dilution potential from convertible debentures now carried in the Company’s books.
According to the release, the Company and its largest noteholder have agreed to exchange convertible debentures (principal and interest) with an aggregate value of $602K for restricted Preferred B equity, thereby reducing total debt and significantly curtailing dilution potential over the coming months and years.
“The Preferred B Shares will be restricted for a period of one year,” said Pierce. “After one year, the Preferred B Shares can only be converted at a maximum 12.5% per quarter of the original common share issuance (a total of 4.5 million common shares). So basically, no more than 562,500 common shares will hit the market in any given quarter.”
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