Premier Biomedical Inc (OTCMKTS:BIEI) is Struggling for Grip

Premier Biomedical Inc (OTCMKTS:BIEI) managed to end last week’s trading with a green close. That’s good. But is it good enough?

Well, when the closing bell rang, the ticker stood at a hair under $0.016 which is about 12% above Thursday’s value, but if you take the time to go through the intraday chart, you’ll actually see that during the first half of Friday’s session, when trading was more intense, BIEI experienced a few serious dips.

What’s more, even after the bounce, the ticker is still a hefty 58% below the peak reached on November 18. The volume was nowhere near as big as it was at the beginning of last week either which goes to show that the excitement around November 16’s press release might have worn off. But has it really?

Well, actually, judging by the message boards and social networks, BIEI‘s supporters appear to be as active as ever. Last Monday’s news about the patent that the company received is being copied and pasted numerous times and people seem to be consistently ignoring the truly woeful financial statement BIEI showcased a few months ago.

So, enthusiasm still seems to be plentiful and the Q3 report is still not out so it can’t be dragging the stock towards the bottom either. But if it isn’t the filings, and if it isn’t the lack of hype, then what’s the reason for BIEI‘s lack of consistency?

Well, the answer might just lie with the latest 10-Q. It says that between November 2014 and February 2015, BIEI issued some convertible notes. At the end of June, the outstanding principal amount on these notes stood at just under $186 thousand and it along with any accrued interest was convertible into stock at discounts that ranged from 30% to 35%.

In September, two similar note agreements were closed and BIEI borrowed a further $98 thousand. This time, the discounts are even higher – between 40% and 42%. The missing Q3 report means that we’ve no idea how much of that debt has been turned into stock, but considering last week’s massive volumes and sharp swings, we won’t be too surprised if some dilution has occurred.

Dilution, as the more experienced among you know, is one of penny stocks’ greatest nemesis and we’ve pointed out numerous times on these pages that ignoring the problem could lead to some pretty terrible losses in some cases. We reckon that BIEI is no exception.