Arrayit Corp (OTCMKTS:ARYC) Bounces Thanks to Message Board Hype
Arrayit Corp (OTCMKTS:ARYC) has been digging a hole in the ground for a while. At the beginning of the year, the ticker was hovering around the $0.12 per share mark. On Tuesday, it hit a 52-week low of just $0.0015. That, in case you haven’t calculated already, means that it lost 98.7% of its value in a matter of just five and a half months.
Would you invest in a stock that tends to lose 98.7% of its value in a matter of just five and a half months? Apparently, many people don’t have a problem with this at all.
ARYC was suddenly juddered to life yesterday and after just six and a half hours of intense trading, it gained a respectable 53%. At the end of the day, its price stood at $0.0026 while the dollar volume amounted to $183 thousand.
Not bad for a stock with such a horrific historical performance, but that’s where a number of problems start to appear. Usually, bounces like this happen when the company issues an important update or a decent-looking financial statement. That’s not the case with ARYC.
There have been no new press releases for over a month and the same goes for the financial reports. There aren’t even any paid promotions. Despite the lack of any new developments, there are many people around the internet forums who don’t shy away from using capital letters in order to tell you that jumping in is a great call.
Apparently, this strategy is working for now, but we’re struggling to see what got these people so supportive of the stock. The latest 10-Q certainly isn’t among ARYC‘s strong points. Here’s a summary of the most important figures recorded at the end of the first quarter:
- cash: $58,761
- current assets: $723,316
- current liabilities: $8,024,110
- quarterly revenue: $787,038
- quarterly net loss: $1,473,332
The statement looks bad enough on its own, but when you compare it to the results recorded during the corresponding period of 2014, you’ll see an even more disturbing picture. There’s been a 28% revenue drop on a year-over-year basis while the operating loss has grown by quite a bit.
That’s not the only problem. If you have a closer look at the latest 10-Q, you’ll see that on March 31, the number of issued and outstanding shares stood at about 57 million. By May 12, however, it had grown to more than 64 million. That, in case you’re wondering, means that ARYC was diluted by 13% in a matter of just 42 days.
There is, of course, a perfectly good explanation for the share printing. At the end of Q1, ARYC had about $475 thousand worth of notes convertible into stock at discounts ranging from 30% to 40%. If you’re not sure what this means you should consider this: on May 11, the company issued a total of 5,823,529 shares in order to satisfy $39,000 worth of debt. The 10-Q will tell you that these shares were issued at $0.0085 a piece, but if you do the math on your own, you’ll end up with a different conversion rate – $0.0069. On May 11, retail investors like you were paying between $0.0185 and $0.014 per share for ARYC‘s stock.
And if you think that the dilution has come to an end you should probably think twice. Yesterday, in a matter of a single session, investors traded 72 million shares – nearly 13% more than the last reported O/S count.
