Bioelectronics Corp (OTCMKTS:BIEL) Crashes Once More
Bioelectronics Corp (OTCMKITS:BIEL) suffered another disastrous session yesterday during which the company lost 23% of its value and closed at $0.001. Sitting at $0.0006 just four sessions ago at least for now the stock has not returned to the triple-zero prices. The plethora of red flags might wipe what’s left of the stock recent gains though.
BIEL‘s products certainly have potential and the fact that the company is generating respectable revenues is a testament to that. Unfortunately, as a whole the financial state of the company is not exactly confidence inspiring. BIEL finished the second quarter of the year with:
• $29,203 cash
• $668 thousand total current assets
• $5.46 million total current liabilities
• $675 thousand revenues
• $732 thousand net loss
When dealing with pennystocks a common red flag is the dilution of the common stock but in BIEL‘s case the rate new shares are being issued is truly horrific. Taken directly from the quarterly report the company has been forced to increase it authorized shares annually starting from 2009 – “from 750,000,000 to 1,000,000,000, with further increases to 1,500,000,000 in 2010, to 2,000,000,000 in 2011, to 3,000,000,000 in 2012, to 4,000,000,000 in 2013, to 7,000,000,000 in 2014, and to 8,000,000,000 in 2015.” That is right, earlier this year BIEL‘s A/S reached 8 BILLION shares. Although that amount may seem extremely scary already a few months ago BIEL further pushed that number to 9 BILLION. Even that wasn’t enough and last month another amendment was approved – this time for 11 BILLION authorized shares.
But why is the company issuing such vast amounts of shares? Well, in order to fund its business BIEL has been taking on more and more convertible loans. The main source of these funds have been the family members of BIEL‘s president. As of June 30 if all of the related part loans get converted another 7,178,011,959 shares will come into existence.
Is there a silver lining to BIEL‘s story? Well, the FDA did reclassify shortwave diathermy from a class III device to a class II device. According to BIEL‘s PR this could result in “an efficient review” of the company’s 510(k) premarket notification. For now though the risks surroundign them remain extremely serious and any trades must be preceded by extensive due diligence.
In early trading today the stock is 10% down currently trading at $0.0009.
