Sanomedics Intl Hldg (OTCMKTS:SIMH) Issues New Toxic Convertibles
Yesterday Sanomedics International Holdings, Inc. (OTCMKTS:SIMH) dropped another 12.5%, again approaching the price level it hit just before the ebola craze sent the share price soaring. At 7.8 million shares changing hands, this was the company’s second lowest volume session following the October 10 price surge.
We have previously examined the company’s Caregiver thermometer, which is still being advertised as the only clinical grade infrared thermometer on the company’s official Twitter. To wrap up the discussion on whether SIMH‘s Caregiver thermometer is the only FDA-approved, clinical grade thermometer in the entire known universe, here is an FDA list of electronic thermometers and their accompanying documentation. If you search that list you will find a number of infrared no-contact thermometers. The Caregiver is also on that list and, just like the others, it is classified as a ‘Thermometer, Electronic, Clinical’.
The other infrared thermometers on that list are Class II, product code FLL, regulation number 880 (General Hospital and Personal Use Devices) – just like the Caregiver. Class II medical devices are approved on the basis of ‘substantial equivalence’ and there is no extra special FDA approval process that would set SIMH‘s product apart. In light of all that, it’s really not clear why SIMH would refer to its product as “the only clinical grade non contact thermometer”.
The company published a new 8-K today as well. The filing informs that on Oct 24 SIMH issued two convertible notes in the amount of $189,375 and $63,125 respectively. Both those are toxic, converting at a fixed 35% discount from a volume-weighted average price 10 days prior to conversion. The noteholders are Redwood Management LLC – the party that also holds a $1.2 million replacement revolving note, and Redwood Fund II LLC.
Whether SIMH has found a bottom or the newly issued toxic convertibles, in addition to the dilution of about 175% within just three months are going to bring the price further down remains to be seen.
