There are now various assessing the situation and I feel some of the due diligence results should be shared bobby - shareholders must know how their investments are being managed. This information was assembled by highly professional executives and sent to me by email today. Here it is.
The BIEL stockholders might be interested the following due diligence results and reflections.
1. The Whelan's are paying themselves about $370k this year in interest on loans by IBEX to BIEL. Of course they don't get this in cash, but their net worth goes up by this amount. Over the year, that is about $740k, when stated as shares upon conversion at the discount rate, not a small figure. (This figure is an estimate, since some of the $433k in reported interest went to other noteholders. With that noted, the report does say that $61K of interest was paid to non-related parties.)
2. The company's cost of capital is really high. They had to borrow $200k from WebBank at an effective interest rate of about 40%. The singular risk on the WebBank loan is related to if BIEL goes into bankruptcy.
3. The number of publicly trading shares is now at just under 22 billion, up from 20.7 billion at the beginning of the year. In other words, this is an increase of 1.3 billion shares and this does not reflect the recent dump of just about 600 million shares this August. Just as importantly, the Whelans have about 37.7 billion potential shares in convertible notes.
4. Kelly Whelan actually pulled money out of the firm this year for her personal uses. She received $357k in revenue by selling shares issued as a result of converted notes, but only reinvested $100K back into BIEL. Naturally, she paid very substantial brokerage fees to perhaps keep her name out of the limelight, since she is barred by the SEC from any dealings in penny stock shares! Why the difference? Is she trying to liquidate some of her debt? Is it because of diminishing faith in the company, unlikely, she knows the potential? Or, perhaps more likely, she is also unable to persuade her father to immediately retire. She has acknowledged he is suffering from diminishing faculties. Likewise some other family member(s) pulled out $157k and only put back $135k, i.e., pulled out a net $22k.
5. In March 2018 the family controlled approx. 61% of the company. This reflects the fact that they owned or controlled approx. 34 billion shares in convertible notes, while the public and other note holders represented 21.7 billion shares. As of June 30, 2019, there were approx. 62 billion shares in total outstanding in terms of free trading and convertible note shares with note holders. The Whelan family had control of about 37 billion shares, an increase of approx. 3 billion shares, while the total number of shares is now about 62 billion. (This reflects a number of outside parties who injected funds into the firm last summer.
6. Thus, the family now controls approx. 60% of BIEL and they took out about $280k in cash, pre-brokerage. In contrast, others invested, or loaned, the company approx. $672k, to help keep it operating, but only received 1% more of the firm's equity control.
Bottom line, there is little, if any, indication that the Whelans are increasing their net investment in BIEL, while they remove more than they reinvest, yet the numerous negative aspects of their management contributions to the firm's progress should perhaps be very carefully professionally examined.
Never buy/sell a stock on my recommendation alone. Always do your own DD and be aware of the risks!
