PositiveID Corp (OTCMKTS:PSID): Is There A Bottom In Sight?

PositiveID Corp (OTCMKTS:PSID) lost 10% heading into a fresh week's trading this week, with the decline being driven by a fresh debt issue that is going to put more pressure on an already embattled shareholder base. Shareholders are right to feel hard done by – PositiveID has what is starting to look like an insurmountable degree of debt on its books – but is there an upside?The thing with PositiveID, is that the company's products are excellent. The company is also generating some decent top line sales, and operationally, looks strong (and getting stronger). If shareholders were looking at products and sales alone, then the company's current market cap would seem extremely unrepresentative of value. Of course, that's not the only thing that needs to be taken in to consideration, and that's why PositiveID is siting on a current cap of just 1% of its valuation at the start of the year.The question is, what's next? Is there any reprieve on the horizon? And if there is, where is it coming from?First, a quick look at the products that underpin the company's operations as things stand. PositiveID is working on a system called Firefly, which is a field testing kit designed to allow for mobile testing of samples for medical testing and bio threat detection. As far as the competitive landscape is concerned, it has the potential to be a real game changer, and as part of another company's portfolio (i.e. one that isn’t dogged with debt and frequent dilution) would be a strong value driver. It's also got a contact less temperature taking kit, called Caregiver, which again is a great piece of kit. It allows for oral equivalent temperature taking without the sensor having to touch the patient, and as per a recent release, is now available with a Bluetooth upgrade that allows for direct connection (and in turn, temperature logging) to a network system at the facility in which it's being used.As we noted in our previous coverage, and especially with reference to the Firefly product, similar technologies have been acquired over the last few years for double digit millions of dollars.The company also has a mobile labs division, from which it generates a large portion of its revenues right now, and this is growing fast. Nine month to September revenues hit $4.6 million this year. Third quarter revenues hit $1.07 million.So, back to the question – where is the growth coming from? Well, convertible debt is not great, but it’s convertible, so while it's not going to help capital structure one bit, at some point near term PosiveID's balance sheet is going to look much improved. That is, if it can continue to grow revenues along the same trend as the last twenty-four months. As balance sheet improves, and revenues expand, we just don't see how the company can remain at a less than $300K valuation. It's products alone are worth many multiples of that from a pure asset value perspective, and if a larger entity doesn’t realize this first and pick up the assets as a single asset purchase, or a buyout of the company as a whole, markets should eventually revalue PositiveID based on this perspective.Yes, capital structure isn’t great. Some $13 million in liabilities doesn’t help either. Cash is weak (at September 30, so not taking into consideration the latest convertible issues) and total current assets ($1.12 million) leave a lot to be desired. All that considered, however, it's not going to take much to get this one running up, and while the longer term potential is unclear, there's plenty of near term gains to be had when it does.We will be updating our subscribers as soon as we know more. For the latest updates on PSID, sign up below!Disclosure: We have no position in PSID and have not been compensated for this article.