Bioelectronics Corp (OTCMKTS:BIEL) Immobilized
If you do some research, you might be able to find one or two things that you like about Bioelectronics Corp (OTCMKTS:BIEL). You might find, for example, that it is a pharmaceutical penny stock company, but unlike the majority of its counterparts in the sector, it has actually gone through the lengthy and expensive FDA approval process.
You might also find the latest press release which came out yesterday and said that Britain’s second biggest beauty and health retailer has placed an initial order for BIEL‘s ActiPatch pain relief product. The sales coming from the other side of the pond will be added to the ones currently generated in the US which, it must be said, have grown quite a bit over the last few years.
Proof of this can be found in the financial report for the second quarter of 2015 which looks like this:
- cash: $29,203
- current assets: $668,154
- current liabilities: $5,463,932
- quarterly revenues: $675,348
- quarterly net loss: $732,175
The sales have logged an absolutely massive 144% leap on a year-over-year basis and at this point, we wish we could’ve said the same thing about the stock. Unfortunately, we can’t. It has actually been behaving rather strange lately.
Back in July, it slipped under the $0.001, and although it managed to resurface above it last month, it seems reluctant to go any higher. Yesterday, despite the good news, it remained virtually still and it finished the session without any daily gains or losses. At $242 thousand, the volume was higher than average, but even that wasn’t enough to push BIEL on a more interesting run. So, while there are a few positive things about the company, investors’ attitude towards the stock suggests that there are some negative factors as well.
Indeed, the more observant among you have noticed that apart from the revenues, the rest of the figures you see above are pretty appalling. The balance sheet is downright ugly and the company is still working at a pretty serious loss which, we can imagine, isn’t to the liking of everybody.
Another thing that investors might not like is the convertible debt and the effects it has had on the share structure. Among the toxic debt is a $2 million convertible note which was originally issued to a related party owned by the daughter of Andrew Whelan – BIEL‘s President. The terms of the note state that the conversion price is negotiated on a case-by-case basis, but the management team did admit that it hovers around 50% of the market price.
In 2014, for reasons that are not disclosed, Mr. Whelan’s daughter assigned $760 thousand of the said note to an unrelated party which later took advantage of the conversion provisions and received nearly 1.4 billion shares at an average rate of $0.0005 per share. This, along with some other instances of conversion brought the O/S count to as near as makes no difference 8 billion on June 30.
At this point, we’re pretty sure that there will be some people who will open BIEL‘s profile at the OTC Markets and will say that this is very close to the authorized cap which should mean that the dilution has stopped. Once you check with Maryland’s Secretary of State, however, you’ll see that unfortunately, this is not the case. On September 22, without telling their shareholders about it, BIEL filed an amendment to the articles of incorporation and raised the number of authorized shares to 11 billion.
