Judging by the momentum of Arch Therapeutics Inc (OTCMKTS:ARTH) stock in the last few trading sessions, it appeared that the stock would end up eroding all the gains recorded in its latest run. However, the stock halted its decline in last trading session, and surged more than 5% to close at $0.624.The fact that it succeeded to close in green gives hopes to investors, but the thing to ponder is how long it can sustain these gains.
It is important to take all the latest happenings in the record. The fact that Arch Therapeutics completed enrollment process in its first clinical trial to evaluate the safety and performance of its lead device AC5 in humans is definitely something that the firm has going for it. It validates that this stock is not just regular idle pharmaceutical underachiever in the OTC marketplace. Not that investors would be able to disclose that it’s not the case, if they analyzed its financials.
In the last released report, Arch Therapeutics reported cash of $1.67 million. The total current assets stood at $1.76 million while total current liabilities amounted to $399,000. It should be noted that the company posted $0 in revenue. The net loss came at $1.25 million. Moreover, just like most other firms in the OTC marketplace, the company is suffering from toxic funding. This debt is largely attributed to the cash spend done on R&D activities.
It managed to acquire the operating funds by releasing bountiful amounts of warrants for buying common stock at pre-specified prices. These kind of steps remains a risk for the stocks trading on OTC, as the bursts of volatility tends to send prices jump on charts in a matter of few trading sessions. Due to the issued warrants, the company had to release 2.6 million shares priced at $0.20 per share in the month of April.