Borislav Tonev

Applied DNA Sciences Inc (OTCBB:APDN) Is In Trouble

by Borislav Tonev September 16, 2013
6APDN.pngWe last wrote about Applied DNA Sciences Inc (OTCBB:APDN, APDN message board) a month and a half ago and back then, the ticker had already taken on a slow and steady course towards the bottom of the charts. Since then, the price has dropped from around $0.15 to the 52-week low of $0.11 registered on Thursday and if you think that this sort of performance is not that horrific, then you should probably keep in mind that back in May, no more than four months ago, the ticker was challenging the $0.27 per share mark.

Hardly confidence-inspiring, but the curious thing is, about a month ago, there was no bad news, paid promotions or other, immediately obvious things pushing the price down.

Now, however, with the quarterly report covering the three months that ended on June 30 out, things seem a bit different. Before we get into the details, we would like to draw your attention to the most important figures found in the 10-Q:

  • cash: $1.8 million
  • current assets: $2.5 million
  • current liabilities: $1.5 million
  • quarterly revenue: $644 thousand
  • quarterly net loss: $2.1 million
  • accumulated deficit: $182 million

If you compare the figures above with the ones found in the financial statement for the first quarter of 2013, you'll see that in just three months, APDN have managed to eat through more than half of their cash reserves while increasing the current liabilities by almost 90%, and while many loyal shareholders around the message boards blame short sellers for the rather horrific performance, we're pretty certain that the deterioration of the company's financial state played a big part in the descend.

Still, we all know about the black clouds and silver linings and in the case of APDN, there might actually be a light at the end of the proverbial tunnel. We read in the Q2 report that while the revenues for the period came primarily from the authentication services, the SigNature DNA markers are now being sold and the recent press releases coming out of the company HQ suggest that more and more orders are being received, which should bode well for the future.

How well, exactly, remains to be seen from the financial statements to come which means that, in the meantime, the stock performance remains as unpredictable as ever. Lots of investors are drawn in, lured by the affordable share price and the clever piece of technology, but just as many are being scared away by the rather substantial dilution that the shareholders have gone through over the last couple of years.

0PWEI.pngThe unknowns around the future profitability is also a risk and so is the threat of a paid promotion. At $0.12 per share, the price is just right, the clever technology is perfect for these sort of campaigns and, as an added bonus, APDN are generating revenues. The long term effects of a potential pump, however, will probably be quite disappointing. If you take the chart on the right, for example, you'll see exactly what we mean. It's for PacWest Equities, Inc. (OTCMKTS:PWEI) and as you probably know, this is Awesome Penny Stocks' latest pick. APS isn't the first outfit to pump PWEI and you can see that the previous attempts didn't go all too well. What is to stop the ticker from crumbling to the ground (just like Alkaline Water Co., Inc. (OTCBB:WTER) did on Friday) once again? Well, nothing and there won't be much to support APDN in the event of a future promotion as well.

All the shareholders can do at the moment is hope that a pump will be avoided while anxiously waiting for the next financial statement.

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