PositiveID Corp (OTCMKTS:PSID) Jumps Out of the Blue
PositiveID Corp (OTCMKTS:PSID) received some extensive promotional coverage throughout 2013 and it, along with some other factors, had a rather devastating effect on the price. The management team effectuated 1-for-10 reverse split in April in an attempt to break the fall, but it didn’t really work and in December the ticker dropped below the $0.03 per share mark. The small volumes suggested that investors are simply not interested in the stock anymore.
Now, however, we’re seeing some shuffling. PSID registered three green sessions in a row during which the ticker jumped from under $0.04 all the way to $0.101.Volume-wise, things looked particularly interesting yesterday. In just six and a half hours, PSID managed to shift more than 5 million shares and racked up a trade value of around $456 thousand. It’s clear that the market is stirred up, but why?
Unfortunately, there aren’t any obvious reasons. A couple of experienced people were added to the management team in January but the effects of the new appointments have already withered. Yesterday, the company announced that they will be taking part in a defense conference organized by an entity called InvestorIdeas, but we doubt that the press release alone is enough to result in more than 75% in daily gains. There isn’t even a pump which makes the surge all the more baffling.
We’re not the only ones struggling to find the reason for the sudden climb. Message boards dedicated to PSID are full of traders who are speculating on the causes. Some say that the surge might be caused by buying from insiders, others reckon that big investors are jumping in, and a third group suggest that information about future contracts has leaked and is causing the upward pressure.
Whatever the cause, there’s nothing substantial to support the run at the moment which means that the stock remains speculative and, therefore, quite risky. Only time will tell if the climb is about to continue and how prolonged it will be, but in the meantime, we might as well take a look at PSID‘s situation and see how far they’ve gone.
We mentioned in our first paragraph that the paid pumps weren’t the only thing pushing the price down and a quick look at the latest financial statements will give you details on the rest of the factors that have exerted pressure on the stock.
The first one is dilution. A quick comparison between the reports for the second and the third quarter of 2013 reveals that in a matter of three months, PSID issued more than 16 million shares. Most of the stock got printed as a conversion of debt or preferred shares and although William Caragol, PSID‘s CEO, said in an interview recently that he wants to stop the convertible financing, the old contracts are still having their dilutive effect (a point driven home by this S-1 registration statement that was declared effective on February 6).
The management team now have to prove to us and, more importantly, to the shareholders that they can find other means of raising money. And they need to do it as quickly as possible since the Q3 results don’t look like much. Here are the figures as of September 30:
- cash: $98 thousand
- current assets: $152 thousand
- current liabilities: $6.2 million
- no revenue since inception
- quarterly net loss: $795 thousand
PSID are trying hard to get their technology going and they have managed to reduce some of the operating costs, but it’s clear that they still have a long way to go. That’s why, at least until there is some more information around the causes for the current run, treading carefully might not be a bad call.
