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By Annette Thatcher
Dec 01, 2014

Affymax, Inc. (AFFY) Spikes On Financial News

On the day before Thanksgiving, Affymax, Inc. (AFFY) issued a couple of press releases just prior to the closing bell, which would have an impact on the penny stock in Friday's session. AFFY ended the trading week with a spike up in price, gaining 113.35% to close at $0.195. The company registered nearly 1.4 million in volume on a trade value of $246.45 thousand.

The first item of news posted by AFFY was an announcement of a cash distribution to the company's shareholders of $0.05 per share. It was determined that shareholders of record on December 2 will receive their respective amounts by December 23. In the same press release, Affymax reported the appointment of a new President and CEO in Jonathan M. Couchman. Mr. Couchman will also serve as a director of the company.Affymax, Inc. stock chart

In another statement the company published, AFFY announced it had adopted a tax benefit preservation plan, aimed at protecting net operating loss carryforwards (NOLs). The company had $481 million in NOLs as of December 31, 2014. In connection to the adoption of the tax benefit preservation plan, AFFY announced a dividend of one preferred share purchase right for each outstanding share of common stock for shareholders on record as of December 8.

Looking past the hype and the initiative the company made to get people on board, we must acknowledge Affymax's current status and aggregates at this stage. The company is now two weeks late on filing its quarterly disclosure for Q3 of its current fiscal year. For this reason, the SEC has labeled AFFY as an OTC Pink Limited Information company.

There is no input on when the company intends to submit its due report. At this point in time, the latest financial disclosure on AFFY is the 10-Q for the period ended June 30, 2014 which contains the following:

  • Cash: $3.3 million
  • Total current assets: $4.4 million
  • Total current liabilities: $214 thousand
  • Revenues: $42 thousand
  • Net income: $7.2 million

The company's cash and asset bases have declined by nearly a half. At the same time, however, the venture has managed to reduce its liabilities to a minimum. AFFY has not been successful in its sales, to say the least, as the proceeds from revenues have been quite exiguous. Despite this, the company has managed to end the period at an income.

AFFYWhile the amounts listed in the second quarter of AFFY's current fiscal year show both good and bad aspects around the company, the lateness of the Q3 report is a major red flag which brings a lot of uncertainty about the company's current state. The fact that AFFY has not addressed the reason for the report running late makes the issue even more severe.

Until there is an update from the company regarding its financial disclosure, investors should proceed with caution and do their due diligence on Affymax if they are intending to invest in AFFY stock.

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