Arch Therapeutics Inc. (OTCBB:ARTH) Is Still Crashing
Arch Therapeutics Inc. (OTCBB:ARTH) tanked in double digits for a second day in a row yesterday, losing 10.48% of its market value on a dollar volume of nearly half a million dollars.
Let’s have a look at what the company has to offer, shall we?
ARTH has proven time and time again that it can generate interest in investors with just announcements and promises. This is good for opportunistic investors but not all that relevant to people who wish to commit to it because they believe that it can create real investor value through hard work and honest toil in the long run.
The company’s latest financial report, covering the period ended June 30, looked like this:
- Cash and cash equivalents – $ 3.2 million
- Total assets – $3.3 million
- Total current liabilities – $1.8 million
- Total liabilities – $9.3 million
- NO REVENUES
- Net Loss – $1.8 million
Truth be told, these numbers don’t really look all that bad, especially since we’re dealing with an OTC Markets pharmaceutical company with no stable source of revenues.
Still, as is always the case, the money that ARTH has on hand have to have come from somewhere. As is more often than not the case in such circumstances, ARTH‘s money came from issuance of vast amounts of common stock. Less than three months ago, ARTH sold 14.4 million investment units to third parties. Each one of those units consisted of 1 common share and 1 Series D warrant, that could be used to purchase 1 share of ARTH common stock for $0.25.
And this is hardly the first time that ARTH has done so. Approximately 10 million shares have been issued through the exercising of Series A and Series C warrants in the last half a year alone! This has brought ARTH‘s shares outstanding to 100.6 million – and that number was current more than 7 weeks ago. Who can really tell how much debt has been transformed into common shares and dumped on the market since then?
The combination of passable financials, the ability to attract attention and the abundance of convertible debt makes ARTH a very risky investment. As can be seen on the company’s recent charts, the ticker can crash abruptly and violently for no obvious reason whatsoever. Investors should take that into account and act accordingly.
