Amarantus Bioscience Inc (OTCMKTS:AMBS) Climbing Again
Amarantus Bioscience Inc (OTCMKTS:AMBS) has never really been one of the quiet companies on the OTC Markets. We don’t know whether they are doing it because they want to keep things as transparent as possible, or whether they just desperately need attention, but the torrent of news, letters to the shareholders, and press releases that they’re pumping out is absolutely astonishing. Of course, you need to decide for yourself whether that’s a good thing or not, but we should mention that over the last few weeks, the announcements are particularly optimistic.
First, AMBS acquired some assets and added a new skin substitute piece of technology to its portfolio. Then, new Directors took their seats on the Board, and yesterday, the company also announced that there have been some preclinical testing of AMBS‘ Mesencephalic-Astrocyte-derived Neurotrophic Factor (MANF) for its effects on patients’ vision. Apparently, the results are good.
In typical AMBS fashion, the press release is full of really complicated and difficult to pronounce words, but although we’re no doctors, we can see that the members of the management team are excited about the developments.
So are investors, by the way. AMBS hasn’t registered a red session since last week and after it added another 4% yesterday, it managed to climb to $0.09 per share. Not bad, you might be thinking, but is it really good enough?
Well, we’ve been around penny stocks for a while and we’ve seen other companies issue a similar number of optimistic press releases in a short period of time. We must say that in most cases, both the volumes and the price gains are much more explosive. Naturally enough, we will now try to find out what’s holding AMBS back.
Let’s start with the fundamentals. While many people might get easily excited by the numerous optimistic announcements, there’s no getting away from the fact that, from a purely financial perspective, AMBS‘ performance is not exactly perfect. Here, for example, is a snapshot of the financial statement as recorded on September 30:
- cash: $680 thousand
- current assets: $1.1 million
- current liabilities: $3.3 million
- NO revenue
- quarterly net loss: $4.4 million
AMBS have been on the scene for a while now, but they still haven’t managed to commercialize their technology and it would appear that the years spent in the development stage are starting to take their toll on the balance sheet.
There is an equity financing agreement in place which means that fresh money will continue to be poured into the company, but this will lead to dilution and that’s probably the last thing the shareholders want. In fact, they’ve gone through plenty of it during the last few months.
The number of issued and outstanding shares grew from 574 million on December 31, 2013 to 786 million on September 30, 2014. In other words, AMBS printed more than 212 million shares in a matter of just nine months.
Perhaps more worryingly, 86 million of them were issued as a conversion of debt at just $0.04 per share and a further 20 million saw the light of day after some warrants were exercised at $0.06 a piece. The burning question is: “When will the discounted stock issuance come to an end?”.
According to the latest 10-Q, there’s no more convertible debt which is definitely a good sign. As we mentioned in one of our video coverages, however, AMBS boosted the number of authorized shares from 1 billion to 2 billion about a month and a half ago. We’ll leave it up to you to decide what this means for the share structure.
