Bioelectronics Corp. (OTCMKTS:BIEL) Explodes
Bioelectronics Corp. (OTCMKTS:BIEL) fully doubled its market cap yesterday, in the most intense trading session it has had in months.
The jump seems to have been triggered by the news that the FDA is reclassifying shortwave diathermy devices from “class III device” into “class II special controls” type device. Investors jumped at BIEL, thinking that such a reclassification will remove the dam that is holding BIEL back, allowing it to turn profitable in the long term and break out in the shorter term.
However, there’s a serious flaw in that specific train of thought. Simply put – it’s not the FDA restrictions that were holding the ticker down until now. It was the company’s own mediocre results and dubious practices that have kept BIEL in double zero land.
Let’s take a quick look at its financials, shall we?
- Cash – $29 thousand
- Total current assets – $668 thousand
- Total current liabilities – $5.46 million
- Revenues – $675 thousand
- Net loss – $732 thousand
As these numbers show, “mediocre” would probably be a pretty mild description for what BIEL has to offer to investors in terms of achievements to date. However, that doesn’t even begin to cover the company’s biggest red flag – which is, without any doubt, its tendency towards rampant dilution.
BIEL‘s shares outstanding had reached 7 billion at the end of Q2 2015. 1.6 billion of those shares were issued since the end of 2014. Most of those shares have come into existence as a result conversions of toxic debt held by family members of the company’s own president and CEO Andrew A. Whelan.
The aforementioned report states that should all of the loans owed by BIEL to related parties be completely turned into shares of common stock, there would be 7.2 BILLION more shares of BIEL stock into circulation.
With this in mind, all of a sudden the future of BIEL investors doesn’t look all that bright. Since so many shares could be converted and dumped on the market at any given point in time, it wouldn’t be surprising to see the ticker plummet back to triple zeros before this session is out.
And even if that doesn’t happen today – investors would do well to be doubly careful, as it might well happen tomorrow, or the day after that, if the price is good enough for notehoders to be stirred into motion.
