Sanomedics Intl Hldg (OTCMKTS:SIMH) Reports Order Boost, Investors Unimpressed

Yesterday morning Sanomedics International Holdings, Inc. (OTCMKTS:SIMH) dropped another press release but it did nothing to stop the slide the share price is going through. SIMH ended trading another 13% in the red, at $0.035 per share on volume of nearly 11 million shares traded.

The company announced over $0.5 million in ‘new business backlog’ that SIMH received in October alone. Most likely this number does not constitute revenue that SIMH will be able to recognize in the current quarter, as revenue backlog is generally not a balance sheet item. The press release does speak of a significant top line growth but makes no mention of any specific figures beyond the $501 thousand backlog in the title.

The first PR that started the craze around SIMH and eventually sent the ticker to an intra-day high of $0.50 was very specific about the size of the thermometer purchase order, even though it was a small one – under 100 pieces. It’s strange that the newsworthy increase in demand in October is conveyed simply as “enormous” demand.

The market’s reaction to the upbeat PR was rather underwhelming. SIMH shuffled up momentarily at the opening bell, then spent the rest of the trading day in the red. Investors could be reading up on SIMH filings and starting to catch up on the actual number of outstanding shares the company now has. When SIMH ran hot in early October, the most current information available on the company’s outstanding shares was that there were 18 million common shares issued and outstanding. This number contrasted sharply with the 30.8 million shares that changed hands within a single session on Oct 13.

The company did follow up with a couple of Schedule 13G filings, announcing beneficial ownership of SIMH shares by third parties. The second of those two informs that as a certain Coventry Enterprises LLC is the beneficial owner of 2.94 million SIMH shares, amounting to 6.29% ownership. This ratio would place the company’s outstanding share number at about 50 million – a far cry from the 18 million reported as of Aug 11.

This 175% dilution in two and a half months is most likely the reason why SIMH is still being pressed down by relentless selling. The stock is currently another 16% down in early trading.