Arch Therapeutics Inc (OTCBB:ARTH) Raises $3 Million In Private Placement
In a new PR Arch Therapeutics Inc (OTCBB:ARTH) announced that they have raised $3,066,000 in a private placement to 19 accredited investors. Another $100 thousand are expected to be raised before the end of the placement. After expenses the company expects at least $3 million in net proceeds. A total of 14,390,913 Units are planned to be sold under the private placement with each unit being priced at 22 cents. The Units consist of 1 common share and 1 Series D warrant for the purchase of 1 common share with an exercise price of $0.25.
Although the pricing seems to be rather reasonable the fact remains that quite a lot of shares will be issued and as a result the outstanding shares will increase from 78 million to nearly 92.5 million. Some investors were definitely not thrilled by the news and it showed during yesterday’s trading. ARTH opened the session at $0.278 but quickly dropped to an intraday low of $0.251. Still, by the time of the closing bell the ticker had managed to recover and closed the session at exactly 26 cents per share for a loss of just 0.04%. Over 1.1 million shares got traded on the market surpassing the monthly average by nearly 5 times.
ARTH definitely needed a sizable cash injection because their financial results at the end of the first quarter of 2015 were rather underwhelming. The quarterly report covering the period contained the following numbers:
• $573 thousand cash
• $606 thousand total current assets
• $1.39 million total current liabilities
• ZERO revenues
• $833 thousand net loss
Now with fresh $3 million in funds ARTH plans to move forward with the development of its products. The AC5 Surgical Hemostatic Device is being evaluated to control bleeding and fluid loss in order to provide faster and better surgical and interventional care. A human clinical trial is planned to begin in the third quarter of the year. Investors shouldn’t forget however that in the latest financial report ARTH stated that between $12 million and $17 million will be needed for them to pursue regulatory approval for the product in Europe and the U.S.
ARTH lack some of the more glaring red flags associated with pennystock companies but they still remain a risky choice. Plan your trades carefully and never put unaffordable sums of money on the line.
