Bioelectronics Corp (OTCMKTS:BIEL) Fails To Move Up
On Wednesday Bioelectronics Corp (OTCMCKTS:BIEL) saw less than 8.5 million of their shares getting traded. Yesterday, however, investors were driven into a frenzy and in a single session they were able to shift over 202 million of the company’s shares. Such a drastic increase is rarely possible without a solid reason so let’s see if we can find what caused investors to suddenly pay so much attention to BIEL.
There were no new filings or PRs issued yesterday but on its official website the company did put up a new company update. Scrolling all the way to the bottom reveals that on June 8 an FDA representative had contacted BIEL and notified them that the U.S. Food and Drug Administration now believes that the 501(k) pathway may be available for BIEL‘s ActiPatch device. Previously the FDA had stated that de novo path might be more appropriate for the ActiPatch.
The news clearly reinvigorated investors and in the early portion of the session the intense buying pushed BIEL to a intraday high $0.0016. The momentum began to disappear soon after that, though, and by the end of the trading day the stock had not only wiped all of its gains but actually dropped 4.54% in the red, closing at $0.00105.
The reversal of the stock’s direction may seem surprising at first but doing even cursory due diligence reveals that BIEL is surrounded by some rather serious red flags. According to the latest quarterly report the company finished the first three months of the year with:
• $22 thousand cash
• $939 thousand total current assets
• $5.87 million total current liabilities
• $528 thousand sales
• $457 thousand net loss
Compared to the same period in 2015 the balance sheet does show some encouraging signs – the revenues are up by around $25 thousand while the net loss has been cut by 40%. The limited cash position and the massive working capital deficit are still as alarming as ever, though.
BIEL‘s biggest problem, however, is the ongoing dilution of their common stock. The company has been issuing mind-boggling amounts of shares – last year more than 4.3 BILLION shares saw the light of day. During the first quarter of 2016 BIEL issued another 63 million shares for consulting services and 332 million shares as a conversion of notes. As of March 31 the company had 11.1 BILLION outstanding shares out of the currently authorized amount of 15 BILLION.
Despite more and more shares coming into existence the obligations of the company under its outstanding convertible debt is actually growing. The quarterly report states that as of March 31 the notes owned by IBEX, LLC are convertible into 12.3 billion shares while the other party related loans of the company can be turned into 8.4 billion fresh shares.
No matter how strongly you may believe in BIEL‘s potential you should still take all of the risks into account before putting any amount money on the line.
