Amarantus Bioscience Holdings, Inc. (OTCBB:AMBS) Slumps Back Down
On Monday the stock of Amarantus Bioscience Holdings, Inc. (OTCBB:AMBS) had one of its most positive sessions in quite a while. It surged upwards adding 10% to its price and closed at its highest point for the day of $0.086. The traded volume almost reached 5 million shares surpassing the volume from the previous session by nearly 3 times. Coupled with the PR that was published around the end of the session and it all pointed out that AMBS should continue its climb on the next day.
Well, that didn’t happen and instead of soaring the stock crumbled back down losing 8% of its price and returning to $0.079. The correction took place on volume comparable to Monday’s and it seems that a lot of investors decided to sell some of their holdings. So, let’s see what is preventing the stock from moving to higher price ranges.
As we said AMBS issued a PR on Monday announcing that they had entered into an exclusive option agreement to acquire an engineered skin substitute (ESS) that can be used in the treatment of Stage 3 and Stage 4 intractable severe burns. The product sounds promising and if the option is exercised Amarantus is planning on conducting a Phase 1/Early Phase 2 clinical study in the second quarter of 2015. There is just one problem though – this will put even more pressure on the already limited resources available to AMBS.
Under the terms of the agreement they will have to pay $4 million upon the execution of the deal not to mention the subsequent milestone-based payments. Furthermore on November 7 the company entered into an Asset Purchase Agreement and according to it they will have to pay a total of $3.5 million and issue 37.5 million commons shares before the end of January, 2015.
The quarterly report for the period ending September 30 revealed that back then AMBS had:
• $680 thousand cash
• $1.1 million total current assets
• $3.4 million total current liabilities
• ZERO revenues
• $4.3 million net loss
The report also showed that as of November 7 the number of outstanding shares had reached 799 million. 4.8 million of the newly issued shares came into existence through the conversion of notes, 4.5 million through the conversion of 8% senior convertible debentures and 20 million through warrants with an exercise price of $0.06. In order to fund their operations the company will have to look for more external financing and with the recently increased authorized shares to 2 BILLION there is a lot of room for future issuances of shares.
AMBS quickly did just that and entered into a securities purchase agreement with Dominion Capital who are going to receive 3,300 of the newly designated Series E 12% Convertible Preferred Stock. Each and every one of them can be turned into common shares at a conversion price of $0.08 but at least there is a six month restriction period.
Even with this new financing in place AMBS will need a lot more funds. They are planning to launch the LymPro diagnostics test for Alzheimer’s disease before the end of the year and the company might finally start generating revenues.
AMBS, however, remains a long-term investment that demands extensive due diligence. Take into account all the red flags around the stock before committing to any trades.