PositiveID Corp. (OTCMKTS:PSID) Regains Some Ground
PositiveID Corp. (OTCMKTS:PSID) managed to add an impressive 26% to its market cap yesterday – but is this just a dead cat bounce?
True enough, there have been some positive developments on PSID lately. It has, reportedly, logged a significant drop in short interest – which is good news. Additionally, the company claims that its products “Outperforms in Evidence-Based Study”, which sounds like the type of news that you should take with a grain of salt.
Once this is taken into account, it seems like there is not much that investors could be excited about. The only other relatively recent development that is relevant to PSID’s current situation is the 1 for 50 reverse split that it performed about three weeks ago.
There’s not much to say about that one – the company’s had issued so many shares in the first seven months of 2016 that a reverse split became necessary in order to maintain the stock’s liquidity.
True to form, this move cut down the shares outstanding and brought the ticker to a respectable price. However, it was treating the symptoms rather than the cause, as it were. Why?
Because the fact remains that last time it filed, PSID had a heap of convertibles outstanding threatening investor value – $3.2 million in short-term debt, to be precise – and it has picked up even more since then.
Let’s take a look at just two of the most recent and striking examples of how PSID goes on about this sort of thing.
At the beginning of June, in order to fund its operations, the company took on $624 thousand worth of debt that converts into shares of PSID common stock at a price “equal to the lower of (i) $0.022 per share or (ii) 65 % of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau OTC Markets exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future, for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company”.
July 5 saw the company pick up another $516 thousand worth of debt, all of which converts at “a 37.5% discount to the lowest closing bid price of the Company’s common stock as reported on the OTCQB for the 15 prior trading days”.
With this in mind, it should be obvious why the chances of PSID keeping any gains it may make in the near future appears rather slim.