Sanomedics Intl Hldg (OTCMKTS:SIMH) is on the Move Again
Sanomedics Intl Hldg (OTCMKTS:SIMH) briefly became one of the most interesting stocks on the OTC Markets when the craze around the potential Ebola breakout sent it on a truly astonishing run. The ticker managed to jump from just over $0.01 per share all the way to more than $0.30 in a matter of just two sessions. Then, however, it proceeded to transform itself into one of the worst performing stocks in Pennyland. When we say “the worst performing”, we mean it.
We’ve witnessed plenty of horror stories involving penny stocks and we’re pretty sure that the more experienced among you are also aware of how dangerous OTC tickers can be. Few, however, have dropped from over $0.30 to less than a penny in a matter of just one month and three weeks. For the numerologists among you, that’s more than 97% of the market cap gone after just thirty-four days. That, as you might have guessed already, is exactly what SIMH did between October 30 and December 3.
Now, though, it’s moving again. On Friday, SIMH managed to escape the sub-penny levels, and during a truly explosive session yesterday, it added a whopping 72% and finished the day at $0.017 per share on a dollar volume of nearly $450 thousand.
You’re probably wondering right now: “Will it sink like a stone once again?”.
To find out, you need to take a look at the reasons behind the two spikes and you’ll also need to consider the things that pushed the stock down again.
Back in October, SIMH was fueled mostly by hype, and unfortunately, right now, there are also some people creating artificial excitement around the stock. The ambitiously named Massive Stock Profits as well as a few other promotional newsletters started sending email alerts after yesterday’s closing bell. The compensations are relatively small, but we all know that whatever the budget, a paid pump can always wreak havoc with the stock performance.
Fortunately, this time there’s also some news pushing SIMH in the right direction. And it’s quite big. About an hour before yesterday’s opening bell the company announced a distribution agreement with Henry Schein, Inc. (NASDAQ:HSIC) – one of the world’s largest providers of healthcare products and services.
So, potential investors can now hope for a brighter future and a more consistent performance. They mustn’t ignore the risks, however, especially in light of some of the facts listed in the latest 10-Q.
Here, for example, is a snapshot of the balance sheet on September 30:
- cash: $40 thousand
- current assets: $763 thousand
- current liabilities: $6.4 million
- quarterly revenue: $83 thousand
- quarterly net loss: $1.6 million
Some of the issues are painfully obvious. The cash reserves are laughable and the working capital deficit is downright terrifying. The revenues have dropped by around 8.2% on a year-over-year basis while the operating loss has more than doubled.
All shareholders can do at this point is keep their fingers crossed and hope that the distribution agreement with HSIC will help SIMH strengthen the revenue stream and improve the profit margins. Even if that happens, however, the toxic debt could still put a spanner in the works.
The latest 10-Q tells us that between October 1 and November 10, the company converted a total of $933,715 worth of debt into 84,235,393 shares of common stock. To put things into perspective, 74% of the total O/S count was issued at an average rate of a little over $0.01 per share, and all this was done in a matter of forty days.
Further conversion of notes could put pressure on the ticker once again, but apparently, people don’t seem to care all that much. About forty minutes after today’s opening bell, SIMH is a healthy 20% above its previous close.
