PositiveID Corp. (OTCMKTS:PSID) Bounces Further, Plans to Up Authorized Shares
After dramatic swings in both directions, PositiveID Corp. (OTCMKTS:PSID) is currently going through another uphill scramble. The company closed 30% up on Friday, making for a total increase of over 50% for the last two sessions alone.
The company is suddenly shifting several times its average volume largely due to the ebola panic in the US. On October 1 the president of the company was interviewed and discussed the company’s Firefly Dx product in the context of the ebola cases registered on US soil, as well as abroad. This immediately sent PSID rocketing from its modest $0.03 per share before the interview.
The gist of the company’s claim to fame is that PSID‘s Firefly Dx system could become a very quick, cost effective and portable tool to identify ebola, among other diseases. That is, after it is actually complete enough to be used in field tests, some 12 months down the road, according to the company’s own estimates. This temporal disconnect from the here-and-now of the ebola problem makes PSID a strange company to be hugely excited about.
Traders are probably also interested in the preliminary Schedule 14C information that the company published on Friday. PSID used the filing to inform that the company has approved an amendment to its articles of incorporation, stipulating a twofold increase of authorized shares. The company’s current authorized shares sit at 470 million and the filing informs of PSID‘s intentions to bring this number up to 970 million.
The company had just 95 million common shares issued and outstanding as of Aug 11, 2014 – a far cry from the old authorized cap at 470 million. An AS increase of any magnitude would mean that PSID is getting very close enough to 470 million outstanding shares. This, in turn, means that the next quarterly which is due in less than one month might show that the company’s common stock got significantly diluted over Q3. If approved, the proposed 970 million AS limit will give PSID plenty of space for potentially diluting further.
The company is not afraid to issue toxic convertible debt so this could be one way to explain the desired increase in authorized shares. In early October PSID issued $150 thousand worth of new convertible debt that can be turned into common stock at a 39-40% discount from market prices prior to conversion.
