After a rather disappointing start of the month when Applied DNA Sciences Inc (OTCBB:APDN
, APDN message board
) lost around 10% in just two and a half days of trading, the ticker opened Friday's session above Thursday's close, it moved up and down throughout the day and finished the session at $0.18 - exactly the same as the previous value. The total volume generated during the day amounted to more than 2.6 million shares which means that just like Norcal Commty Bcp Ca (OTCMKTS:NCLC
) and Vapor Corp., (OTCMKTS:VPCO
) there wasn't much percentile movement but there was certainly some intense trading. So, what about the future?
Well, about an hour into today's trading session the ticker is around 1.4% above Friday's close and shareholders are certainly hoping that the new week will change the tides bringing APDN back above the $0.20 per share mark very soon. Furthermore, the green movement doesn't seem to be the result of either press releases or paid promotions, which proves that people still seem to trust the company and the people who manage it.
The thing is, there is also a second side of the coin. Every start up company need some time to develop their product and put it on sale. In the case of APDN the product requires a really advanced piece of technology that makes things rather difficult and the result of all this is the fact around five years after they started, they're still deep in the development stage.
Their latest financial report does show that they have managed to generate $344 thousand worth of revenues from the first quarter of 2013, but they got them through authentication services, and not through their state-of-the-art DNA markers. Furthermore, we read in the 10-Q that things are not going quite according to plan since the switch from the current revenue stream to the sales of the brand new product is being delayed for some reason.
On the plus side, they do seem to be trying hard to get the proverbial show on the road. Their efforts include the purchase of some more intellectual property for the total amount of $624 thousand back in May, the appointment of new officers with impressive professional biographies and participation in international exhibitions and these are all things that will certainly help APDN along the way, but unfortunately, we haven't seen an announcement about a new contract in a while now and although they are still hanging on, the shareholders might start to get impatient at any time. Especially with the sort of stock performance we've seen in the recent weeks.
Speaking of which, we should point out that the rather disappointing behavior displayed by the ticker might also be due to the problem that so many small cap companies are experiencing during the development stage - dilution. A quick check into the older filings reveals that between May 2012 and May 2013 APDN issued around 140 million shares of common stock and some of the more recent 8-K forms suggest that the printing press might need to work overtime in the near future as well. The lack of steady and profitable cash flow means that all these shares are pushing the price down, and if the people who hold them decide that they have had enough and release them on the open market, the results could be devastating.
That's why, while the business plan that APDN have developed really does sound interesting, they will need to convince us that they are able to stick to it. So far, they've been struggling with this particular task, and that's why a potential investment should be well thought through.