Bioelectronics Corp (BIEL)

[Rheeper]

Lol, $2.5million profit per quarter? Serious question, but is this gross profit? There is no way BIEL will generate $2.5milliom in net profit per quarter unless we’re talking about Zimbabwe dollars.

According to KW’s unit sales “guidance” of 1.5m for 2020 and an ex-factory price of about $10 per unit (per Andy), this would translate into revs of $15million. It’s highly doubtful BIEL’s manufacturing partners have the capacity to support this level of sales, or that BIEL has the manpower (8 employees) but let’s assume they do.

OEM sales are usually lower margin (30%) because the focus is driving sales and market share gains. As a result, don’t be surprised if BIEL’s gross margin is lower than its historical range of 40%-60%. However, let’s be aggresssive and assume 60% margin. This would imply gross profit of $9million.

SG&A would amount to about $7million which would translate into an operating profit of $2million.

After deducting for debt servicing costs of $1million, this would result in net profit of about $1million under a blue sky scenario.

Of course, the upside surprise is if BIEL forges a partnership and receives a cash injection which would lead to a one-time contribution profit.

Don’t forget though, the share count has risen 50% since the 2017 FDA announcement and there is $800k in notes maturing this year so any share price momentum will be short lived due to the ongoing, massive dilution from CB holders