Arrayit Corp. (OTCMKTS:ARYC) Wipes More Of Its Gains
The stock of Arrayit Corp. (OTCMKTS:ARYC) is having troubles keeping its gains from last week. For the last four sessions the ticker has closed in the red three times and the corrections have been severe. Yesterday the stock crashed by 16% and dropped down to $0.0042 per share. The 94 million shares that changed hands throughout the session surpassed the monthly average by nearly three times.
ARYC are generating respectable revenues and on June 16 in a twitter post announced that their Arrayit shop has exceeded $50 million all-time sales. Unfortunately, this doesn’t mean that the company’s financials are in an encouraging state. On the contrary, the latest financial report covering the first three months of the year painted a rather grim picture:
• $59 thousand cash
• $723 thousand current assets
• $8 million current liabilities
• $787 thousand revenues
• $1.4 million net loss
As we said nearly $800 thousand in quarterly revenues are indeed impressive for a pennystock but when compared to the same period last year that number actually shows a 28% decrease in revenues. The massive working capital deficit of $7.1 million doesn’t make the situation any better.
If that wasn’t enough though investors should also be wary of the potential dilution of the common stock that could have reached alarming levels. $1.2 million of the reported liabilities consisted of convertible notes with around $470 thousand allowing their owners to convert them at a 30% to 40% discount. And the owners in question are some of the most notorious toxic funders operating in the world of pennystocks – JMJ Financial, KBM Worldwide, Tangiers. The latest Schedule 13G filing revealed that Typenex Co-Investment LTD owned 10% of the 64,3 million outstanding shares as of May 29.
Typenex is managed by Red Cliffs Investment whose sole shareholder is JFV Holdings who in turn are owned by Mr. John M. Fife. Mr. Fife was targeted by a SEC complaint alleging a “fraudulent scheme to purchase variable annuity contracts” and engaging in “market timing”. The court’s verdict was for Mr. Fife alongside Clarion Management to pay a disgorgement of $234 thousand. Additional $234 thousand had to be paid by Mr. Fife as a civil penalty.
Although there are no official filings stating the number of the outstanding shares at the moment last Thursday over 232 million ARYC shares got traded in a single session, a pretty good indication that a massive amount of shares may have been issued recently. Some investors are claiming that currently the O/S is approaching 300 million shares. If the conversions continue at the same rate ARYC may be forced to increase their authorized amount of 480 million shares.
Arrayit may be a real company with real products but the risks around them remain significant. The impact on the share price of millions upon millions of discounted shares being unleashed on the open market could be devastating. Any trades involving the stock must be preceded by extensive due diligence and careful planning.
