PositiveID Corp (OTCMKTS:PSID) Remains Highly Volatile
Last Friday the stock of PositiveID Corp (OTCMKTS:PSID) spiked to a new 8-month high of nearly 5 cents per share. Although the ticker couldn’t maintain such prices for long it still finished the session with a gain of over 19% at $0.0422. During the first session after the weekend, however, after a rather turbulent trading PSID logged a loss of 9% and slid down to $0.0384. The stock remains extremely volatile but for now it is managing to keep nearly all of its gains – at the start of June the company was actually sitting at around $0.016 per share.
But what was the reason for the massive surge up the chart? It is true that PSID did move forward with the development of their handheld prototype PCR (polymerase chain reaction) pathogen detection system called Firefly Dx. In fact, yesterday they published a mid-year update detailing the most important events that took place since the start of 2015. The reaction from the market wasn’t that ecstatic though and, as we said earlier, PSID actually closed the session with a sizable correction.
No, the main reason for the stock’s rise is the numerous paid PRs and emails that have been creating as much artificial hype around the company as possible. Pumps are not that uncommon in the world of pennystocks but it is quite unusual for a company to sponsor its own promotion. PSID have been doing exactly that – the parent company of the entity The Wealthy Biotech Trader is being compensated $25 thousand a month in addition to a convertible note amounting to $62,500 while the pump newsletters OTPick and SmallCapCrowd have received 500 thousand restricted shares and yesterday issued email alerts touting PSID. The Daily Stock Reporter also featured PSID in one of their PRs and although this time their parent company, EGM FIRM INC, wasn’t compensated back in March they were paid $25 thousand to pump PSID by Hanover Financial Services.
Some might say that inherently there is nothing wrong in a company tying to spread awareness about itself and this could indeed be true. As far as PSID is concerned however spending so much money on paid promoters seems rather alarming when you take into account the depressing state of theirfinancials. The quarterly report covering the first three months of the year showed that at the end of March the company had:
• $598 thousand cash
• $608 thousand current assets
• $9.7 million current liabilities
• $131 thousand quarterly revenues
• $3.8 million net loss
With a working capital deficit of $9.1 million, accumulated deficit of over 136 million, and 34% decline in revenues compared to the previous quarter PSID definitely fails to inspire much confidence. But the picture gets even grimmer when you add the dilution of the common stock. In less than six months the company has converted around $1.7 million of its convertible debt into 83.1 million shares. This makes the average price of each share just $0.013. PositiveID recently increased their authorized shares from 970 million to 1.97 BILLION which could indicate that even more shares could be issued in the future.
The risks around PSID should not be underestimated in the slightest. Every trade involving the stock should be preceded by extensive due diligence and careful planning.
