Why Did PositiveID Corp (OTCMKTS:PSID) Crash?

PositiveID Corp (OTCMKTS:PSID) managed to slide nearly 20% down the charts yesterday in a session of fevered selling – but why?

Truth be told, at this point in time, asking why PSID got smashed to smithereens may be the wrong question entirely. A more appropriate question would probably be – how did it manage to retain its ground until now at all?

A bit of due diligence reveals that the company’s financials for Q1, 2015 look simply atrocious:

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

But, bad as it is, PSID‘s working capital deficit of $9.1 million and accumulated deficit of over 136 million are probably not the biggest red flag that this filing can show.

No, the most disturbing sign of trouble can be found at the very beginning of the report – as of May 11, 2015 PSID had 262 million shares outstanding. Just to put things into perspective – as of November 10, 2014, PSID had 159 million shares outstanding.

All of these shares were issued as a result of conversions of promissory notes with toxic conversion provisions lowering the prices of said shares to an average price of of about $0.013. Investors should take a moment to punch those numbers into a calculator and consider the results that come out when they draw the line.

And after doing so, they might also want to think on the fact that the company has a lot more outstanding debt, and that it has increased its authorized shares from 970 million to 1.97 BILLION, and that it has been the target of multiple paid pump campaigns recently.

Under these circumstances is it really any wonder that PSID is currently dropping like a rock?

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