Bioelectronics Corp (OTCMKTS:BIEL) Fails To Move
Yesterday investors showed quite a lot of interest in the stock of BioElectronics Corp. (OTCMKTS:BIEL) with nearly 340 million shares changing hands throughout the session. The monthly average for the stock is over 7 times lower at 46.7 million shares. The intense trading however did not translate into an upward movement for the stock. In fact, BIEL barely managed to close flat $0.0006 with a last minute jump.
Investors certainly have a lot of reasons to be cautious when approaching the stock of the company. Despite the fact that for the second quarter of the year BIEL reported an increase in revenues of 140% compared to the same period last year the financial state of the company remains absolutely horrendous. As of June 30 BIEL had:
• $29,203 cash
• $668 thousand total current assets
• $5.46 million total current liabilities
• $675 thousand revenues
• $732 thousand net loss
If the minimal cash reserves and the massive working capital deficit are not enough of a red flag for you let’s move on to the fact that the company has been funding its operations primarily through loans from the family members of BIEL‘s President. And these related parties have in turn been receiving astronomical amounts of shares through the conversion of debt. The dilution has been mind-boggling.
Just take a look at the times BIEL had to increase their authorized amount of shares in the past couple of years: “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.” This, however, is not the end. Due to the 1.6 billion shares issued in the first half of 2015 as of June 30 BIEL had reached 7.99 billion outstanding shares. And, you guessed it, another increase in the authorized shares followed, this time to 9 BILLION.
If you are hoping that the dilution will eventually come to an end you might want to take a look at the following line taken straight from the quarterly report – “the corresponding shares to be issued on the conversion of these other related party loans has increased from 5,393,518,265 at December 31, 2014 to 7,178,011,959 at June 30, 2015.”
It should be obvious that BIEL is an extremely dangerous stock. The company has to keep its revenues growing but the debt must be put under control. Otherwise the rampant dilution will continue to devastate the ticker.
