Aethlon Medical, Inc. (OTCBB:AEMD) is as Inconsistent as Ever
Aethlon Medical, Inc. (OTCBB:AEMD) is just one of the many OTC biotech companies trying to develop a product that will help diagnosing and treating life-threatening diseases like cancer. They seem convinced that they can do it.
There’s been a lot of PR action around AEMD. The company CEO, James Joyce, has made numerous appearances on different websites and events and today, he is supposed to present AEMD‘s business plan at The Wall Street Analyst Forum. Some companies like Emerging Growth LLC are also hard at work drawing attention to the stock. Of course, they’re not doing it for free. According to Emerging Growth’s disclaimer, between October 2013 and January 2014, they received a total of $32 thousand for marketing services. Unfortunately, the increased awareness doesn’t seem to be resulting in any sort of consistent growth for the stock.
In fact, AEMD is proving to be quite unpredictable. Back in December 2013, for example, it was hovering between $0.13 and $0.15. In January, it made a run and briefly surged above the $0.20 mark. A roller coaster like ride followed and between February and April, the ticker fluctuated wildly between $0.16 and $0.27. Yesterday, AEMD lost 13% of its value and finished the day at $0.165 per share.
The most baffling thing about the crash is that the dollar volume stood at a hefty $425 thousand and there doesn’t seem to be any immediately obvious reason for the sell off. Lots of people are speculating on the cause for the drop, but nobody can be sure about anything.
Still, AEMD has always been perceived by most traders as a long-term investment rather than a quick play. Unfortunately, there are some uncertainties around the future as well.
Let’s start with the latest report. It covers the fourth calendar quarter of 2013 and it contains the following figures:
- cash: $1.8 million
- current assets: $1.9 million
- current liabilities: $12.6 million
- quarterly revenues: $76 thousand
- quarterly net loss: $2.2 million
The revenues are coming from government contracts which means that they don’t really represent AEMD‘s products’ true potential. The thing that should be worrying investors the most is the huge amount of debt.
Unfortunately, a large portion of it is comprised of convertible notes most of which are in default. There were even some legal proceedings against the company related to some of the notes and although AEMD managed to settle the case, they had to issue quite a lot of stock along the way. As is often the case, the conversion features carry some pretty tempting discounts which could, at some point, present a rather big profit opportunity for the former creditors.
The threat of dilution should not be underestimated. Tranzbyte Corp (OTCMKTS:ERBB), for example, issued more than 1.4 billion shares of common stock in a matter of just twelve months. As you can see from the videos and articles we’ve published, they printed the majority of the stock at rates much lower than the market price. Right now, despite the so-called green rush, the effects on the ticker are becoming more and more apparent.
That’s why, doing your own due diligence and carefully weighing the risks is absolutely essential.
