PositiveID Corp (OTCMKTS:PSID) Displays Quick Reactions

A few weeks ago, the people at PositiveID Corp (OTCMKTS:PSID)’s helm decided that the stock needs more attention. Some deals were closed, some money was paid, and a few outfits started touting the ticker through various articles and research reports. The market’s reaction wasn’t particularly noticeable at first, but on June 16, The Wealthy Biotech Trader (who receive a monthly fee of $25,000 from the company and own a $62,500 convertible note) compared PositiveID to Advaxis, Inc. (NASDAQ:ADXS) and all of a sudden, everything changed.

In a matter of just three sessions, PSID almost doubled its value and it even briefly touched the $0.04 per share mark on June 18. On Friday, it experienced a rather embarrassing fall when it wiped out more than a quarter of its value, but apparently, the management team are here to save the day once again. Earlier today, they issued a very peculiarly-timed press release and as a result, about an hour and twenty minutes after the opening bell, PSID is sitting at $0.036 – 25% in the green.

So, willingly or not, the people at the company’s helm did a pretty good job of controlling the damage caused by Friday’s scary drop. But what did they say exactly?

Well, apparently, they have tested their much-talked-about FireflyDx with twelve different assays and the device has detected all the pathogens within the space of twenty minutes. That’s undoubtedly good news and shareholders should hope that it can improve PSID‘s future financial statements. The latest 10-Q shows that there are quite a few things that need fixing. Here are the figures:

  • cash: $598 thousand
  • current assets: $608 thousand
  • current liabilities: $9.7 million
  • quarterly revenues: $131 thousand
  • quarterly net loss: $3.8 million

The balance sheet is absolutely atrocious, but that’s not really news for the people who have been following the company for long enough. What is worrying, however, is the fact that work on most of the contracts signed in 2014 was completed during the first days of this year which means that the revenues have dropped by about 34% on a quarter over quarter basis.

All in all, if PSID is to have any chance of success, the company will need some massive purchase orders and some massively improved profit margins. But while you’re keeping your fingers crossed, you mustn’t forget to consider another equally massive problem – the toxic debt.

The company has issued quite a lot of convertible notes over the years. As is often the case, the discounts hover around the 40% mark and by the looks of things, the share structure is now starting to feel the pressure. During the first five and a half months of 2015, PSID printed a total of 86,311,000 shares in order to satisfy about $1,168,000 worth of notes which brings the average conversion rate down to just over $0.01 per share.

The company is still issuing convertible notes which means that estimating the amount of toxic debt still waiting to be converted is not easy. PSID recently raised the number of authorized shares from 970 million to 1.97 billion, however, which could suggest that the people behind the company might be expecting some more dilution in the near future. Make sure you’re prepared for it.

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