Bioelectronics Corp (OTCMKTS:BIEL) Crashes
After sitting flat at $0.0014 for three sessions in a row on below-average traded volumes yesterday the stock of Bioelectroncis Corp (OTCMKTS:BIEL) enjoyed far more intense trading. Investors shifted over 150 million shares throughout the session but the increased attention from the market did not translate into a positive chart movement. Instead BIEL suffered a harsh hit when it crashed by more than 14% and closed at $0.0012.
The reason for the stock’s plummet can be found in yesterday’s PR. In it BIEL announced that it is still in negotiations with the U.S. Food and Drug Administration regarding the company’s 510(k) premarket notification for its ActiPach Musculoskeletal Pain Therapy. Investors were not particularly thrilled to learn that apparently the FDA believes that the 510(k) route is inappropriate. Not that surprisingly BIEL disagrees.
Don’t forget that just a couple of months ago another agency found some problems with the company. The Securities and Exchange Commission decided that “public administrative and cease-and-desist proceedings” had to be instituted against BIEL. The SEC alleged “inaccurate public disclosure and the unlawful distribution of securities” by BIEL and related persons and entities.
Even if you somehow decide to disregard all of this completely you would still be left with the dire financial state of the company. The annual report for 2015 showed that BIEL finished last year with:
• $144 thousand cash
• $993 thousand total current assets
• $5.7 million total current liabilities
• $2.34 million sales
• $2.47 million net loss
While it is not that of a common sight to find a pennystock that generates over $2 million in annual revenues this achievement is simply not enough to offset the rest of the numbers on the balance sheet.
But now we have to deal with the biggest red flag hanging over BIEL – the rampant issuance of shares through the conversion of debt. Just last year the company managed to issue over 4.3 BILLION shares bringing the number of outstanding shares to more than 10.7 million as of December 31, 2015. If the printing presses continue to churn out shares at the same rate BIEL will soon have to increase their currently authorized amount of 15 BILLION shares.
And this is not that unlikely. At the end of 2015 the company had outstanding notes that, if converted completely, could be turned into a total of 19,746,294,046 shares.
You should approach BIEL with utmost caution. The risks are extremely serious and any trades must be preceded by thorough due diligence and careful planning.
