PositiveID Corporation (fka PSID)

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A R/S enacted at the right time is bullish.

I agree with many comments that 9/10 times penny stocks conducting reverse splits it is a sign of desperation and is perceived negatively by shareholders. Many traders will sell any R/S announcement due to predictable patterns of declining market caps both before and immediately after an R/S takes place. In some cases the declines do not materialize however dependent upon the conditions present.

All that matters currently are contracts PSID is seeking (BioWatch / DTRA). It can be argued that a reverse split would be very helpful to PSID should they be awarded any significant portion of these contracts.

Here is my thesis (assume this was enacted today):

Current: pps = .02 / 52 week low = .011 / 52 week high = .14 / 2 year high = $1.09 (338 million shares outstanding)

1/25 split: pps = .50 / 52 week low = .28 / 52 week high = $3.48 / 2 year high = $27.25 (13.5 million shares outstanding)

Assume they are awarded at least a portion of the Stage 1 Gen 3 contract. I argue that this news would return the stock to 52 week highs and set the stage for potentially even higher prices and interest in the stock. With that in mind think of it this way. Which of these two share structures would benefit PSID and shareholders most if the company was awarded a contract?

With the current share structure a return to the 52 week high would mean a pps of .14 vs. a pps of $3.48 (1/25). A return to the 2 year high would mean a pps of $1.09 vs a pps of $27.25 (1/25).

There is no question that this R/S announcement can create short term volatility (assuming there is no further announcement/clarification from the company) however I can clearly see the potential benefit to the company and the shareholders.

Additionally the most explosive companies typically have small floats, low market caps, and low dollar per share prices similar to what would exist assuming a 1/25 spit was enacted.

All IMO of course.