Bioelectronics Corp (OTCMKTS:BIEL) Suffers A Devastating Crash
In just two sessions the stock of Bioelectronics Corp (OTCMKTS:BIEL) managed to move from $0.0006 to a close at $0.002, a massive gain of over 233%. All the commotion was caused by the FDA’s reclassification of the shortwave diathermy devices from class III into “class II special controls” type device.
All those who believed that thanks to the hype the stock would experience another extremely positive session yesterday were left bitterly disappointed though. In just a single session BIEL crashed so hard that they wiped 35% of their value. Closing at $0.0013 for now the stock is staying above the triple-zero price ranges but will it manage to stabilize?
BIEL is simply surrounded by red flags. Their financials are far from encouraging with the financial report for the quarter ended June 30 containing the following results:
• $29,203 cash
• $668 thousand total current assets
• $5.46 million total current liabilities
• $675 thousand revenues
• $732 thousand net loss
If you dig a little bit deeper however you will realize that BIEL‘s problems are far more serious. The company has been funding its operations through convertible loans provided by related parties – mainly the family members of BIEL‘s president. And these loans are being turned into shares rather meticulously causing an increase of the authorized shares to be approved annually for the past several years.
This year however things have really gotten out of hand. Earlier in 2015 BIEL increased their authorized shares to 8 BILLION but with over 1.6 billion shares being issued in the first six months of the year as of June 30 the O/S count had reached 7.99 BILLION. What did the company do? – They bumped the A/S to 9 billion of course. It appears that even this increase was simply not enough and as the new amendment shows BIEL now have the authority to issue up to 11 BILLION shares.
Today, before the start of the trading day, BIEL issued a new PR applauding the FDA’s decision and stating that the reclassification could lead to “an efficient review” of the company’s 510(k) premarket notification. Even if you believe in the potential of BIEL‘s products putting any money into the stock is extremely dangerous. The crushing dilution and the potential of another 7,178,011,959 shares to see the light of day if all of the related loans are converted demand the use of caution. Do extensive research and adjust your trades accordingly.
