ArrayIt Joins The Spinoff Dance

In another sign that spinoffs are the latest corporate fad, Arrayit Corporation(ARYC), a company with a market cap of just $2.4 million, has decided to spin off and distribute to shareholders its 78.18% stake in Arrayit Diagnostics.  The company, which became public through a reverse merger several years ago, apparently feels that its vast and diverse business interests are an impediment to growth and investment

John Howell, the current CEO and President, will continue in that capacity, focusing on the approval process with the FDA and establishing strategic relationships for marketing of the test. “Operating as a separate public entity will enable Arrayit Corporation to focus on its core business of advanced equipment sales and manufacturing for the life sciences, while simultaneously allowing Arrayit Diagnostics the opportunity to fully commercialize its ovarian cancer diagnostic technology,” states Howell.

With luck and much hard work, perhaps one of the two new companies will achieve a lofty $2 million market cap and have to pursue a spinoff of its own, lest its gargantuan size preclude any further growth. Or perhaps, they’ll just pursue whatever the fad of the moment happens to be when the time comes.  Taking our tongue out of our cheek, this is something to avoid.  Splitting one tiny unprofitable company into two is not a recipe for success.

Disclosure: The author holds no position in any stock mentioned