New 52-week Low For Bioelectronics Corp (OTCMKTS:BIEL)

Yesterday investors displayed enormous interest in the stock of Bioelectronics Corp. (OTCMKTS:BIEL). In fact, the 543 million shares that were traded during the session are the biggest daily volume registered by the company since February 2014. The performance of the stock, however, was far from positive with the ticker dropping to a new 52-week low of $0.0003. At least thanks to a last minute jump BIEL were able to close the day flat at $0.0005.

Although BIEL reported a 140% increase in revenues for the second quarter of the year compared to the same period in 2014 the financial state of the company continues to be extremely dire. The quarterly report for the period ended June 30 contained the following numbers:

• $29,203 cash
• $668 thousand total current assets
• $5.46 million total current liabilities
• $675 thousand revenues
• $732 thousand net loss

The red flags surrounding BIEL run far deeper than the atrocious financials though. Through the years the company has been funding its operations primarily through loans from several related parties – “Robert Whelan and Janel Zaluski, the son and daughter of the President, Mary Whelan, the sister of the President, St. John’s LLC, which is owned by family members of the President, and Richard Staelin, who is Chairman of the Board of Directors.” So, in short, BIEL owes a tremendous amount of debt to the family members of its President and that debt has been continuously converted into common shares at discounted prices.

The resulting dilution has been massive and as we told you in our previous article the company has been forced to increase its authorized shares time and time again reaching 8 million earlier this year. As of June 30 however BIEL‘s outstanding shares, thanks to a total of 1.6 billion shares issued in the first half of 2015, were already sitting at 7.99 billion. This lead to yet another amendment of the authorized amount to 9 billion. According to the quarterly report the related party loans could be turned into 7,178,011,959 shares if converted entirely.

Sitting deep into the triple-zero price ranges means that any amount of hype could propel BIEL up the chart. Sustaining the positive momentum will be extremely difficult however. The threat of even more discounted shares being printed and the fact that BIEL will need to continue relying on outside sources of funds must be taken into account before any trades are attempted.