Sanomedics Intl Hldg (OTCMKTS:SIMH) Headed Down Hard Again
Sanomedics Intl Hldg (OTCMKTS:SIMH) had an amazing run on Oct. 10 and Oct. 13, but it was pretty obvious that this growth was unsustainable. Since then the ticker has crashed hard repeatedly with scant little respite – yesterday’s session alone cost SIMH 35.82% of its market value. Still, somehow, the situation just seems to be getting worse.
As is the norm with such big chart movements of late, the initial surge was made possible by the exploitation of hype. In this particular case, it was an announcement that SIMH has received an “initial purchase order for nearly 100” units of its Caregiver TouchFree thermometers from the Center for Disease in Control that lit the rocket’s fuse. Opportunistic investors saw that combination of hype and favorable news as a golden opportunity – and one glance at the charts determines that, yes, indeed looks like such an assessment was correct. For a few brief hours at least.
Fast forward to just five sessions later, and you’ll find the ticker in a wild tumble to the bottom of the charts. Why? Because once the smoke cleared it immediately became obvious that the SIMH‘s stock is not really worth what it was sold for – not with SIMH showing numbers such as these on its latest balance sheets:
- Cash – $7 thousand
- Current assets – $125 thousand
- Current liabilities – $4.67 million
- Sales – $56 thousand
- Net loss – $1.59 million
And that’s not the only thing that’s pushing stock prices down. There is currently $1.4 million worth of debt that could be converted into shares at a 37.5% discount from the lowest traded VWAP 5 days prior to conversion, then dumped on the market. Sadly, there is no way to tell if this has already happened or it could happen at any moment – but the threat of toxic funding coming to strangle investor value is very real with SIMH at the moment.
The one thing that SIMH has going for it is the fact that it did technically receive a government commission. However, when you think about it, the company has been awfully vague about its activities after the “initial purchase order for nearly 100” thermometers. What does “multiple shipments have been made in recent days to the Centers for Disease Control” mean in terms or revenue? How many units does a shipment contain? As few as one or as many as a hundred?
In its PR, SIMH boldly boasted that its thermometers have been “enlisted” in the fight against Ebola, but anyone can make boastful claims in order to exploit hype. That is why investors would be wise to be extra careful when dealing with companies that do so.
Another OTC Markets medical penny stock company that exploited the Ebola hype to achieve amazing share price jumps is PositiveID Corp (OTCMKTS:PSID), who, just like SIMH, crashed horribly yesterday.
