SpectraScience Inc. (OTCMKTS:SCIE)’s Bounce Didn’t Last
SpectraScience Inc. (OTCMKTS:SCIE) had a rough tumble after filing its latest financial report. Last Friday it finally managed to put an end to its red streak, but unfortunately for its supporters its recovery didn’t last.
Buying the dip and riding the bounce is an altogether common tactic of OTC Markets investors, and sometimes it yields enviable results. However, one has to be very quick and vigilant to make it work – especially with what could only be a dead cat bounce.
And, truth be told, it was clear from the get-go that if SCIE bounced at all, it would go right back down again. Why?
Well, the reason for the crash was the filing of the company’s latest financial report. It was so dreadful that investors started abandoning ship as soon as the market had time to react to the numbers in it:
- Cash – $55 thousand
- Total current assets – $645
- Total current liabilities – $8.5 MILLION
- NO REVENUES
- Net loss – $209 thousand
Truth be told, these numbers are unimpressive, but since mediocrity is more often than not the standard on the OTC Markets, they hardly seem to warrant a wave of panicked selling. That is, until you take into account the fact that $5.4 MILLION of the company’s current liabilities are in the form of convertible promissory notes.
Such a high number is disturbing in and of itself, but if you pair it with the tendency of SCIE‘s notes to convert at discounts ranging from 10%-20% to 40%-50% it becomes downright horrifying.
And unfortunately for investor value, it’s not like note holders are abstaining from conversions:
- As of November 12, 2014 SCIE had 173 million shares of common stock outstanding
- As of November 16, 2015 SCIE had 210 million shares of common stock outstanding
All of these factors combined have driven the ticker to the ground, and although there is really no telling when and how high it could bounce, it seems like any recovery will be just a speed bump on SCIE‘s way down.
