LabStyle Innovations Corp (OTCMKTS:DRIO) Corrects Despite Increased Interest

Yesterday the market displayed increased interest in the stock of LabStyle Innovations Corp (OTCMKTS:DRIO). The volume for the session reached 617 thousand shares while the monthly average is around 35 thousand shares. The last time the ticker saw similar levels of trading was way back in April.

The intense trading was not enough to push the stock higher up the chart though. On the contrary, DRIO suffered a mild correction closing 3.03% in the red at 32 cents per share. At the end of September and the start of this month DRIO closed flat at that exact same price – $0.32 per share, for seven consecutive sessions. Although the ticker has not been able to surge higher it should be noted that it is also not falling down. Indeed DRIO is among the more stable pennystocks out there.

The company is the developer of the Dario Diabetes Management Solution. The product has received a CE mark certification allowing the company to market it in the EU and several other countries. This enabled DRIO to become a revenue generating entity and so far their results have been quite encouraging. The financial report covering the second quarter of the year showed that as of June 30 the company had:

• $981 thousand cash
• $1.6 million total current assets
• $1.54 million total current liabilities
• $175 thousand revenues
• $2 million net loss

Compared to the first quarter of 2015 the reported revenues have grown by 161%. Things are definitely moving in the right direction but for now losses have remain massive.

Another thing to take into consideration is the fact that DRIO have been funding their operations primarily through private offerings of units. While this has allowed the company to stay away from any toxic funders the common stock has still been diluted severely. Back in February over 11 million shares were issued as part of units at a price of $0.18 per unit. More recently DRIO raised approximately $2.5 million by selling units priced at $0.30 each. The funds did strengthen the balance sheet of the company even more but with millions of shares being issued at that price it could explain the stock’s inability to move farm from the 30 cents mark. As a whole the outstanding shares of DRIO have grown from 16.2 million at the end of 2014 to 42.7 million as of October 5, this year.

At the start of last month DRIO announced that they were granted a new patent from the U.S. Patent and Trademark Office. In the same PR the company stated that they expect a response from the FDA in the coming months. DRIO filed for marketing clearance through a form 510 and if it is approved they will be able to enter the U.S. market.

DRIO definitely have a lot of potential but before putting any money on the line you should still do your own research. Take the various risks into account and adjust your trades accordingly. 

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