Advanced Medical Isotope Corp. (OTCMKTS:ADMD) Crashes

The stock of Advanced Medical Isotope Corp. (OTCMKTS:ADMD) suffered a painful blow during yesterday’s trading. The ticker was slowly sliding down the chart for the past couple of sessions but now it simply plummeted towards the bottom wiping close to 12% of its value and closing at $0.0052. The intraday low was even scarier with the stock going all the way down to $0.004.

Doing even a cursory due diligence will reveal a plethora of red flags that could explain the negative sentiment displayed by investors. Let’s start with the fact that the OTCMarkets’ profile page of the company is branded with the OTC Pink Limited Information warning sign. It was put their due to ADMD failing to file its latest financial reports within the required time. On May 25 the company finally submitted its annual report for 2015 but the quarterly report covering the first three months of 2016 is still nowhere to be found.

The financials in the annual report are now quite a bit old but for the moment they are the most up-to-date information that is available – as of December 31, 2015, ADMD had:

• $179 thousand cash
• $214 thousand total current assets
• $9.97 million total current liabilities
• $24,108 consulting revenues
• $6.2 million net income

Before you get too excited about the positive bottom line of more than $6 million it must be clarified that this achievement came as a result of a $3.56 million gain on settlement of debt and a $7.89 million gain on derivative liability. The operating loss for 2015 incurred by ADMD stands at $2.58 million.

According to the annual report the company will need approximately $1.5 million in funds for the next twelve months in order to maintain its current activities. Additional $5 million to $10 million will be needed to fund the approval process for ADMD‘s brachytherapy products in the next 12-24 months.

Raising the money could prove problematic. After issuing 199 million shares last year as a cashless exercise of warrants ADMD maxed out their amount of common shares and as of May 13 the company’s O/S was sitting just 1,481 shares below the authorized amount of 2 billion common shares. ADMD still had quite a lot of outstanding warrants, options, and convertible debt, though, so instead of common shares they started using their Series A preferred stock, each of which can be turned into 1000 common shares.

Initially the company was authorized to issue 2.5 million Series A preferred shares but they were fast approaching that number with 2.4 million outstanding Series A shares as of May 13. That is why they decided to double the authorized amount to 5 million Series A preferred shares. As we said earlier, at the moment no conversions into common shares can be accommodated but that could change if ADMD decide to implement a reverse split, which they are authorized to do. Prior to October 15, 2016, the company could perform a reverse split at a ratio ranging from 1-for-100 to 1-for-300.

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