Bioheart, Inc. (OTCMKTS:BHRT) Turns the Page
Bioheart, Inc. (OTCMKTS:BHRT) has not really had much luck as a public company. In fact, its story has been rather sad.
It might seem a bit strange considering the current price of $0.004 per share, but BHRT‘s stock was once traded on NASDAQ. The company completed an IPO in order to have it listed there and they were initially hoping to raise as much as $70 million from the offering. In reality, they raised a fraction of this amount and they were faced with quite a lot of criticism for the shaky first steps on the public markets. Some more negative comments were to follow.
About a year after it appeared on NASDAQ, BHRT was de-listed from the national exchange because it was unable to comply with the requirements regarding profitability. Right now, seven and a half years later, it will still struggle to cover them. Here, for example, is what the financial statement for the second quarter of 2015 looks like:
- cash: $93,534
- current assets: $139,821
- current liabilities: $8,169,211
- quarterly revenues: $565,307
- quarterly operating loss: $480,244
To top it all off, the people behind BHRT have yet to commercialize the MyoCell technology that they’ve been talking about for so long. The revenues you see above come from laboratory services and the sales of catheters and other medical devices.
All in all, BHRT has been struggling. The members of the management team, however, reckon that it deserves a second chance and they think that if they change the company name to U.S. Stem Cell, Inc. and effectuate a 1 for 1,000 reverse split, BHRT will get it. The plans were first announced through an SEC filing after Wednesday’s closing bell and yesterday, the company also issued a press release which means that everybody is now aware of what is about to happen. But how should investors react to the news?
Apparently, they don’t know. The ticker did experience some increased trading during yesterday’s session, but it failed to register significant moves in either direction. The truth is, BHRT investors are indeed faced with a rather big dilemma.
On the one hand, the new name, if nothing else, could signify a new chapter in the company’s history which will hopefully be filled with more positive events. The reverse split, however, is a worry.
BHRT‘s management team will try to convince you that the split will make the stock more appealing to institutional investors, but while this might just happen, the more experienced among you know that OTC tickers tend to do quite badly after a reduction in the O/S count.
If BHRT is to avoid a similar fate (and if it is to appeal to the big fish), it will absolutely, positively need to get rid of the toxic debt. And that could be difficult.
There were tonnes of notes outstanding at the end of June and, as always, they were convertible into shares at some pretty hefty discounts. Entities such as Asher Enterprises and Magna Group (whose fame landed its CEO on the pages of Bloomberg) are present in BHRT‘s filings and they have already received some cheap shares. In July, for example, some note holders pocketed nearly 20 million shares at just $0.002 per share. During the same period, Magna bought around 6.3 million shares at $0.005 apiece.
Once BHRT emerges from the massive reverse split, it could have some liquidity problems due to the smaller float which means that the holders of the toxic notes might be eager to convert the debt and walk away while the ticker is still in the sub-penny levels.
Extra caution is advisable.
