Arch Therapeutics Inc (OTCBB:ARTH) Submits Its Quarterly Report
After over three weeks of underwhelming chart performance the stock of Arch Therapeutics Inc (OTCBB:ARTH) is once again showing its ability to make huge jumps up the chart. Yesterday the ticker climbed to a close over 14% in the green at $0.43 per share. What seems to have reinvigorated investors is the quarterly report that was filed by the company last Thursday.
So let’s see if the results announced by ARTH for the quarter ended March 31, 2016, are enough to push the stock even higher up – according to the report a little over a month ago the company had:
• $1.67 million cash
• $1.76 million total current assets
• $399 thousand total current liabilities
• ZERO revenues
• $1.25 million net loss
Although on a year-over-year basis the net loss has increased by around $400 thousand it should be noted that the operating loss has remained roughly the same. Furthermore, the company now expects that its cash resources should be sufficient to carry them into October 2016, a significant improvement over the estimates from the previous financial report, in which ARTH projected that they will have to seek additional funds prior to or during June 2016. The change is most likely due to the funds that flowed to the company as a result of the exercise of warrants – the subsequent events section of the quarterly shows that in April ARTH received over $1 million through such exercises.
What investors shouldn’t forget, though, is the fact that these warrants have exercise prices that are far lower than the current market price of the company’s stock. ARTH may have received a significant boost to their financials but they also had to issue over 2.6 million shares through the exercise of Series A and Series C warrants at $0.20 per share while 2.4 million shares saw the light of day at $0.25 per share as an exercise of Series D warrants. During April ARTH also converted their remaining $100 thousand in convertible notes and $8,622 in accrued interest into 540 thousand shares at an average price of $0.20.
ARTH has been publishing a steady stream of encouraging PRs – just last month they received three different notices of allowance for patents. Back in March the company initiated patient enrollment and treatment in its first clinical trial and announced favorable data for their AC5 Surgical Hemostatic Device from a wide panel of preclinical biocompatibility tests and a 21-day repeat skin exposure test.
No matter how excited you might be about the potential of ARTH underestimating the risks may not be a wise decision. The millions of cheap shares could still wreak havoc on the share price of the stock if they get unleashed on the open market. Setting up appropriate time horizons and doing thorough research should precede any trades involving penny stocks.
