PURE Bioscience (OTCMKTS:PURE) Suffers A Devastating Blow
It is safe to say that since the start of 2014 PURE Bioscience (OTCMKTS:PURE) has been one of the most stable ventures operating in the world of pennystocks. Despite a couple of setbacks their stock has been consistently trading above the 1 dollar mark. The company has also been able to achieve some rather impressive results.
In July PURE submitted a Food Contact Notification (FCN) with the FDA for their silver dihydrogen citrate for raw poultry processing while last month they did the same for produce processing. Just a week later came the announcement that their PURE hard surface disinfectant is going to be used in almost all SUBWAY locations in the U.S. It seemed that everything was going PURE’s way.
Not anymore -early in the morning yesterday another PR was published but this time it revealed rather troubling news- PURE had withdrawn the FCN for poultry. Apparently the FDA had some new toxicity concerns and will need more data and additional information from the company. Furthermore PURE expect that their second FCN will have the same fate.
The press article caused a massive wave of panic selling. The stock began plummeting for the bottom almost from the get-go – it opened with a gap down and quickly fell to a low of just $0.475 per share. Although it recovered somewhat and at the time of the closing bell was sitting at $0.70 it had still wiped exactly 30% of its value. The traded volume for the day almost reached record levels with 612 thousand traded shares. Now that the market has reacted to the news will PURE manage to recover?
Well, just two weeks ago the company filed its annual report for the fiscal year ending July 31 and it showed some significant weaknesses:
- $86 thousand cash
- $478 thousand total current assets
- $1.8 million total current liabilities
- $550 thousand net product sales
- $11 million net loss
Compared to the previous fiscal year revenues dropped down by 33% while net loss increased by 43%. At the same time the cumulative net loss has surpassed $81 million.
Back in August PURE boosted their cash position substantially through a private placement. As a whole they gathered around $7.9 million in proceeds with $4 million of them provided by Franchise Brands, LLC, a company created by the founders of SUBWAY Restaurants. This new injection of funds should be enough to keep the company going for quite a while and this could mean that the dilution of the common stock should at least slow down. Still, since July 31, 2013, the number of outstanding shares has more than tripled. Starting from 12 million in just twelve months that number grew to 29 million at the end of July, 31, this year. As of October 28 there were 39.7 million outstanding shares.
Any trades involving PURE‘s stock should be attempted after doing thorough due diligence. The company has a lot of promising aspects but the recent unfavorable events could cause their stock to become extremely volatile.
