Arrayit Corp. (OTCMKTS:ARYC) Explodes On Massive Volume

Arrayit Corp. (OTCMKTS:ARYC) managed to increase its market value by 177.78% on Friday, on a record dollar volume of more than half a million.

The sudden and violent explosion of trading was most likely caused by the hype created by social media touting and SierraWorldEquityReview, who have been extremely effective at attracting investor attention to ARYC.

Under these circumstances, there is really no wonder that stock prices jumped sky-high, in spite of the company not having any relevant new filings or PR.

Still, prudent investors know that there is more to due diligence than reading twitter posts. In fact, most of the proper due diligence must be done by researching the company’s fundamentals.

They’re called fundamentals for a very simple reason – they are really important, because they can show what’s wrong or right with a company on a fundamental level. And in the case of ARYC, reviewing them gives more than a few cases for alarm:

• Cash – $58 thousand
• Total current assets – $723 thousand
• Total current liabilities – $8 MILLION
• Notes payable – $1.2 million
• Total revenues – $787
• Net loss – $1.4 million

Investors are currently taking solace in the fact that the company hasn’t been on the receiving end of a paid pump, and there doesn’t seem to have been all that much dilution recently:

As of May 12, 2015, there were 64,371,019 shares of common stock outstanding.
As of May 4, 2014, there were 39,522,098 shares of common stock outstanding.

However, the fact remains that ARYC‘s financials are not reassuring to say the least, and become even less so if you consider the fact that most the convertible debt that the company has outstanding has horrible toxic conversion provisions, such as:

at 60% of the lowest OTCQB quoted trading price for the twenty (20) trading days prior to the notice of exercise
at 30% discount to the average of the three lowest OTCQB closing bid prices of the common stock during the 10 trading day period prior to conversion

Investors should definitely keep that in mind – and also consider it in relation with the previous data. Currently, ARYC has relatively few common shares outstanding – if note holders were to start converting debt into cheapies and dumping them millions of them on the market, the end results could be catastrophic.