Yup, we’ve got live tomorrow 1-2PM ESTcoming at you
To better understand the concepts outlined below, I suggest you check out my 10 hour “Learn To Read SEC Filings” DVD package
This morning I sent this alert tosubscribers and :
: shorted 25k POSC at .24 cents/share at IB, low priced, but its up from 3 cents/share, very SPNG-like, pumping it, ugly research coming, goal is to cover under 15 cents/share in 1-5 days
I wish I could find more shares to short as the research below will scare you and surely make you question the ethics of all involved.
To understand POSC, you must understand similar plays NewCardio, Inc. (NWCI) and Radient Pharmaceuticals Corporation (RPC)…
This is how the game works–bullish interviews and reports come out on with these fundamentally-challenged biotech companies (look at their fundamentals, or lack thereof), the stocks spike, they do financings and within a few weeks the stocks crash.
NOBODY wants to finance a dead in the water penny stock, but if that penny stock spikes 100%, 200%, 300%+, then buyers come to the table due to the willingness of the desperate company to issue shares at discount prices….hype & PIPE, whatever you wanna call it)
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After chasing the story for the last 24 hours, and seeing the key patent announcement hit the news wires on Thursday morning, it is my opinion that if the buyout occurs, it will likely send shares of NewCardio somewhere between $10 and $14.
Not surprisingly, NWCI did not receive any buyout offer and while the report caused the stock to spike from under $1 to $2+/share…
Most notably, NWCI’s stock tanked 40% within 2 days of the initial “buyout” report and as you can see from the chart has pretty much stayed down 40% and more the past few months, no $10-$14 buyout looking likely anytime soon.
And unlike NWCI’s post-report 40% drop, RPC managed to drop 50% within 2 days (50,000+ shorting that predictable move, thanks BMR!) and now is holding 60% below the hype-report-induced highs.subscribers and raked in $
So, now we get to the latest potential biotech buyout report, of which I regretfully am only short 25,000 shares at 24.2 cents/share.
This has by far the worst fundamentals of the 3 companies and the question in my mind isn’t whether it will drop 40, 50 or 60%, it’s will they even be able to pull off a financing at all!
Because these companies need these financings to take place to have ANY shot at remaining in business (as you’ll see from the gagworthy fundamentals listed below) so if POSC can’t pull off a financing, methinks it’ll drop 90%+, back to the 3 cents/share range from which it came.
Remember this chart and we’ll look back in May, June, 2010, 2011, whenever and my guess is it will drop 60-90%+
Whether or not I stick around longterm, here’s why I thik this company stinks.
Yup, a simple annual report.
A very telling annual report. One that contains passages like
The Attrius Cardiac PET system has received the Food and Drug Administration approval in April 2009.
(Their technology is not new so why hasn’t it taken off in the past year?!?!?! Forget taking off, check out they have experienced 30%+ revenue declines, massive losses, little assets and large and increasing liabilities:
Revenues – The Company generated revenues of $1,446,000 and $2,126,000 for the years ended December 31, 2009 and 2008, respectively. Revenue from service contracts totalled $827,000 and $1,150,000 for the years ended December 31, 2009 and 2008, respectively
Net Loss – For the year ended December 31, 2009, the Company had a net loss of $5,749,000, or $0.02 per share, compared to a net loss of $8,975,000, or $0.07 per share, for the year ended December 31, 2008.
At December 31, 2009, the Company had current assets of $923,000 and total assets of $988,000 compared to December 31, 2008 when current assets were $1,033,000 and total assets were $1,104,000.
Current liabilities at December 31, 2009 were $7,947,000 compared to $7,254,000 at December 31, 2008.
And how this situation has CRUSHED R&D spending (the only real hope for struggling medical companies is to develop new products):
Research and development costs for the year ended December 31, 2009 were $178,000 compared to $1,027,000 for the year ended December 31, 2008.
An annual report that outlines the company’s long history of business failure:
Since inception, the Company has expended substantial resources on research and development. Consequently, we have sustained substantial losses. Due to the limited number of systems sold or placed into service each year, revenues have fluctuated significantly from year to year. The Company had an accumulated deficit of $91,329,000 at December 31, 2009.
And how they are all but out of business:
The Company’s current financial condition raises doubt as to its ability to continue as a going concern. The report of the Company’s independent public accountants, which accompanied the financial statements for the year ended December 31, 2009, was qualified with respect to that risk. If the Company is unable to obtain debt or equity financing to meet its cash needs it may have to severely limit or cease business activities or may seek protection from creditors under the bankruptcy laws.
As for this report’s bullish assertions…allow me to try to pick them apart one by one
1. The company “is currently in discussions with a potential partner in our industry.”
Sure, every company is in discussions with potential partners, given POSC’s history of business incompetence and old medical technology, what kind of company would want any discussion to last very long…okay, okay, perhaps POSC can sweet talk a few of the dumber companies and pick up enough drink tabs to help them get into “detailed discussions”, but I doubt this statement.
2. According to today’s exclusive report, Rooney feels confident that his company will thrive financially given that “the cardiac business is five times greater than the oncology business.”
“Everyone has a heart problem; not everyone has cancer,” said Rooney. “Once you have a heart issue, they’ll put you on some kind of imaging device to test your heart. It’s just where medicine is going. Everyone over 45 or so is starting to get imaged at the first sign of any heart issues.”
Ohhhhhhh, everyone has a heart and people usually make it to over 45 so every person over 45 with a heart (not including heartless penny stock promoters) is a potential client of POSC! Wow, that surely will help revenues not drop 30%+ annually in the future, right? Who needs little stuff like cash and R&D spending when the vat majority of people in the world are potential POSC clients! Hey, you know what, there are also a ton of companies in the world run by people over 45 who have hearts, does this mean that all those companies are potential POSC partners? Forget R&D spending, perhaps POSC should allocate their meager assets to hiring receptionists & support staff to handle all the demand of companies wanting to partner with POSC!
3. Over the past two weeks, however, multiple sources have told the news portal which covers Wall Street’s biomedical sector and delivers financial and investment intelligence to a community of highly informed investors that details about “a big announcement involving Positron and a much larger publicly traded NYSE company” could come as early as next Monday.
Who am I to contradict “multiple sources”, I am just one person and I am under 45 so I do not have the pulse (get it) of the market for POSC products and partnerships. But my guess is any NYSE company that will partner with POSC (and there are a lot of them because most NYSE companies are run by people over 45 with hearts) are in some business related to POSC’s current financial condition.
International Paper Co. (IP) they make paper and POSC will need a ton of paper for all the prospectuses to raise enough $ to stay in business, especially given that since their inception, they’ve burned through $91 million, approximately what their marketcap is today after this recent BMR-induced 1,000% spike.
Waste Management, Inc. (WM) they clear waste and if POSC doesn’t get their financing, as their annual report states “If the Company is unable to obtain debt or equity financing to meet its cash needs it may have to severely limit or cease business activities or may seek protection from creditors under the bankruptcy laws.” methinks WM will be called in to haul away all the waste that POSC has created over the years.
You get the picture.
But I hope I am wrong about the NYSE company partnership, perhaps POSC does have a big partner in waiting, wanting to join forces on a technology that’s gone nowhere in the year since its been approved, waiting to buy all their liabilities, and struggling business…
I’ll win either way because it’s a great educational lesson for you and all subscribers to my 4and all students of my .
I’ll either cover my short for solid gains if POSC follows the lead of RPC and NWCI or I can add to my short position at higher prices and wait for POSC to do what its always done, fail to grow their business, lose money and have their stock plummet gradually over time.
Aren’t penny stocks grand?
Gotta learn the differences between possible-financing-linked press releases & touts vs. the cold hard ugly SEC filings…recognizing the differences and spotting red flags is easy once you know what to look for.