Bio-Matrix Scientific Group, Inc. (PINK:BMSN) Tumbles After Quarterly Report
Yesterday Bio-Matrix Scientific Group, Inc. (PINK:BMSN) slipped another 23% to a close at half a cent per share. The company’s quarterly report for the period ended December 2012 issued last week seems to have had a negative effect on investor confidence.
Last Monday BMSN announced its HemaXellerate product aiming to treat anemia received an Investigational New Drug number as part of the process of pushing HemaXellerate into clinical trials. The news helped BMSN close 11% in the green on that day but the stock went back under a cent in the following sessions.
The quarterly report that followed the press announcement contained a lot of numbers that many could consider disappointing. Here is a brief summary of BMSN‘s financials as of December 2012:
- $815 in cash
- $1.8 million in current liabilities
- zero revenues since inception
- $596 thousand quarterly net loss
- $1.3 million net loss for the year ended Sep 2012
The fact that the company is not generating revenues means that to continue operations it has to issue stock for cash. The last quarterly filing contains information about a large number of convertible notes issued over 2012 and convertible at discounts of up to 60% from an average lowest price. In Q4 of 2012 alone BMSN issued over 700 million common shares to clear debt and satisfy contractual obligations, with an additional 200 million shares issued in Q1 of 2013, including 100 million as settlement for a complaint filed in a Pennsylvania court by 18KT.TV LLC.
This basically means that BMSN experienced over 500% dilution of its common stock to date, compared against June 2012. With 2 billion common shares authorized, BMSN still has a way to go, currently at 1.12 billion outstanding common shares.
Considering its current financial situation and the fact that their anemia treatment product is still awaiting the comments and suggestions of the FDA, the possibility of success remains distant and BMSN remains a sub-penny gamble. It is natural for biotech companies to incur significant losses during their development stage, traders only need to determine for themselves how much is too much.
