PositiveID Corp (OTCMKTS:PSID) Jumps Up The Chart But Will It Keep Its Gains?
Yesterday the stock of PositiveID Corp (OTCMKTS:PSID) was able to break from its depressing chart pattern and finish the session with a gain of 20%. Closing at $0.021 the stock managed to break above the 2 cents per share mark for the first time since late April. Investors showed increased interest in the company and the daily volume of 9.2 million shares surpassed the 30-day average by close to 4 times.
Despite the impressive outcome of the session the numerous red flags that plague the company still cast serious doubt on its ability to continue moving in the right direction. Let’s start with the latest financial results reported by PSID. The company finished the first quarter of the year with:
• $598 thousand cash
• $608 thousand total current assets
• $9.7 million total current liabilities
• $131 thousand revenues
• $3.8 million net loss
The fact that PSID actually generated some revenues during the quarter, for the same period last year the company had zero revenues, simply cannot offset the rest of the numbers found in the balance sheet. The company has a massive working capital deficit of $9.1 million and an accumulated deficit of over $136 million.
However, the picture starts to become even grimmer when you take into account the continued dilution of the common stock. At the start of 2014 PSID had 45.5 million outstanding shares but by December 31 that number had reached 169 million. With the start of 2015 the issuance hasn’t slowed down even a bit and as of May 11 PSID reported 262 million outstanding shares. The majority of the issued shares came into existence through the conversion of notes and preferred shares. As of March 31 the company had $1.4 million in short-term convertible debt.
Reading all of this you might think that PSID would be rather reluctant to issue even more convertible notes but that doesn’t seem to be the case. If you take a look at the bottom of yesterday’s PR published by the Wealthy Biotech Trader you will see that its parent company is being paid $25 thousand per month by PositiveID. In addition they have also received a $62,500 convertible note. Investors should keep in mind that PSID is often targeted by paid pumps with the last one taking place just a couple of months ago.
Although the company is making progress with its FireFly DX, a real-time, handheld polymerase chain reaction (PCR) automated pathogen detection system, the negative effects of the dilution and the millions of discounted shares could continue to negatively influence the movement of the stock. Even more so if you take into account the fact that on April 30 PSID increased their authorized shares from 970 million to 1.97 BILLION.
