BioSolar Inc (OTCMKTS:BSRC) Crashes Hard
The stock of BioSolar Inc (OTCMKTS:BSRC) closed the June 15 session at $0.07 without a single share getting traded throughout the day. All that, however, changed on the very next day when BSRC announced that they are developing a new technology that will result in the creation of a “super lithium-ion battery”. This battery will double the range of a Tesla automobile, cost four times less, have a faster recharge rate and longer life.
The PR had a profound effect on the performance of the company’s stock – just three weeks later BSRC managed to break through the 50 cent per share mark posting a high of $0.54 last Thursday. As you know though talk is cheap while developing a technology that could have a massive impact on several industries requires sufficient funding. And this is where the red flags around BioSolar start to crop up.
The company finished the first quarter of 2015 with:
• $173 thousand cash
• $239 thousand current assets
• $3.6 million current liabilities
• ZERO revenues since inception
• $155 thousand operating expenses
The numbers clearly show that investors might have gotten a bit too excited and that the current market price of the stock may be too inflated to be supported for long. Indeed, this Monday BSRC showed signs of hesitation when they dropped by 5.75%. The correction wasn’t that alarming but that cannot be said about the severe crash that took place yesterday. The ticker opened at $0.53 but by the time of the closing bell had fallen to $0.38 per share for a loss of over 22.4%. The dollar volume for the session of $301 thousand is a new record for BSRC.
The new PR that was issued yesterday could have played its role in the downfall of the stock. Although BioSolar announced the extension of their research agreement with the the University of California, Santa Barbara, the fact that the program was extended by whole 12 months till June 2016 means that it may take quite a lot of time before the so-called super battery is completed.
More importantly this gives more time for even more convertible debt to be turned into common shares at a massive discount to the market price. At the end of March BSRC reported $730 thousand in convertible promissory notes. The subsequent events section of the report reveals that on April 20 2.8 million shares were issued through the conversion of notes. On the next day another 182 thousand shares were issued at a little more than $0.033 each while on April 28 413 thousand shares saw the light of day at an even lower price – $0.013 per share.
If these shares find their way to the open market, a more than likely possibility thanks to the inflated price of the stock at the moment, the effects on the ticker could be devastating. Even if you believe in the potential of BSRC’s technology don’t forget that they are still a pennystock venture and that the risks around them should not be underestimated.
