Bioelectronics Corp (OTCMKTS:BIEL) Awaits Further Instructions

Bioelectronics Corp (OTCMKTS:BIEL) published their report for the third quarter of 2015 last week and told us that sales have gone up by about 116% on a year-over-year basis. They also said that the gross profit margin looks a lot better now than it did twelve months ago.

Looking at the chart, however, you would never guess that the said statement has come out. In fact, on the very day of the publishing, BIEL dropped from $0.0014 to $0.0012 and it’s been moving sideways ever since. The volumes, though not insignificant, are nothing to write home about, either which goes to show that investors aren’t really sure how they should treat BIEL. Let’s see why.

Well, the truth is, despite the rather impressive revenue jump, overall the Q3 financials aren’t what you’d call confidence-inspiring. Here’s a summary:

  • cash: $23,521
  • current assets: $624,932
  • current liabilities: $7,402,576
  • quarterly revenues: $499,869
  • quarterly net loss: $727,349

As you can see, the figures are far from perfect and although things are looking good on a year-over-year basis, sequentially, the revenues have actually dropped by about 26%. This, of course, is far from the only problem.

In fact, the biggest issue lies with the absolutely horrendous dilution that BIEL and its shareholders have been put through. On June 30, the number of issued and outstanding shares stood at 7,999,028,602. On September 30, it was sitting at 9,274,346,731. This means that in the space of three months, BIEL printed 1,275,318,129 shares. It also means that they’ve been issuing an average of just under 14 million brand new shares of common stock per day.

In light of this, it’s actually a bit of a surprise that BIEL is managing to stay out of the triple-zero land at all. There’s no telling when the support will vanish under its feet, however. Especially when you consider the fact that the exuberant stock printing might continue in the future.

As we discussed in our previous articles, the diabolical dilution is coming from some convertible note agreements with an entity called IBEX LLC which is controlled by the daughter of BIEL‘s CEO, Andrew Whelan. BIEL borrows money from IBEX on a fairly regular basis and in exchange, the company issues some convertible notes.

Curiously enough, instead of asking for its money back from BIEL, IBEX tends to sell its notes to unrelated third parties who then convert them into stock at 50% or less of the current market price. You’re probably wondering what the outstanding amount under those notes was at the end of Q3.

It was $5.4 million.

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