All of a sudden, stock price of AMERICAN SCIENTFC RES (OTC:ASFX) crashed down. Yesterday, ASFX lost 33.33% on the phenomenal traded volume of over 31 million shares. However, no particular explanation on the crash was found.
The latest news by the company was issued last Friday when ASFX, Nevada entered into an asset purchase agreement with American Scientific Resources, Inc, Delaware. Pursuant to the Agreement, the Company sold certain receivables and certain intellectual property to the Purchaser for a purchase price consisting of (i) $50,000 cash advanced at closing and (ii) a royalty for up to five years from the date of closing equal to 5% of the Purchaser’s net revenues less returns less direct costs and joint marketing money up to a maximum of $4,000,000.
Instead of pumping up ASFX stock price, it looks like the purchase agreement made it fall and now it is interesting how far the stock may go.
American Scientific Resources, Inc. is a purpose-driven consumer product manufacturer specializing in the clinical, home healthcare, infant and juvenile product industries. Historically, the company used to trade significantly higher, though since last year the stock price has moved down.
Unfortunately, the last 10-Q report of ASFX looks disastrous. As of September 30, 2011
the company’s total liabilities were much higher than its assets, and the net loss has increased as compared to the previous year. Besides, both the stockholders’ deficit and the accumulated deficit flew up.[BANNER]
Over the last three years, operations of ASFX have been funded primarily by sales and issuances of the company’s securities and revenue generated from sales of its products. However, there is no assurance that new sources of debt or equity financings will be available on terms acceptable to ASFX, or at all. Thus, the company’s auditors expressed substantial doubt about its ability to continue as a going concern.
The continued existence of ASFX is dependent upon its ability to successfully execute its business plan, secure additional sources of liquidity and obtain accommodating credit terms from vendors, note holders and other creditors. Should the company be unable to renegotiate the terms and conditions on its debt obligations or is otherwise unable to pay its accounts payable when due, ASFX may incur materially higher interest expenses.
Additionally, the debt holders could foreclose on their collateral and commence legal action against the company to recover amounts due which ultimately could require the disposition of some or all of its assets. Any such action may require ASFX to curtail or cease operations.