Bioelectronics Corp (BIEL)

[kidnova]

These financials are bad, no question and now they find themselves at the same place they were yesterday which is at the mercy of the FDA. One thing that is clear is that BIEL really needs to run better credit checks on their customers...20% of their revenue (38% of gross margin) was written off as bad debt expense. Considering 98% of their business is with 3 customers that's not good at all.

Anyways, this is the typical BIEL pattern. A flurry of PRs leading up the the release of the financials with what they hope will be a biggie (patent announcement) on the same day as the release. The point is to minimize the damage done by the financials and I really can't fault them for that even if it's predictable.

There is also a trend developing in their rate of dilution. If you ignore 2009 (where they really stuck it to the common shareholder with 1.2 billion shares), the pattern is pretty clear now.

2010 - 75 million shares issued (still fat with cash after 2009)
2011 - 400 million shares issued
2012 - 715 million shares issued

These of course correspond to the price of shares at issuance. If the average PPS for 2013 remains relatively flat to 2012 then you can expect another 700+ million shares to be issued (contingent on any additional debt conversion that might occur for Kelly Whelan shopping sprees) this year which would naturally necessitate an increase in the AS. If the PPS drops, then it's likely to be 1 billion+.

All this to say that, IMO, it is still FDA or bust for current shareholders as the rising OS count is severely limiting the rate off PPS increase due to organic sales growth outside of the U.S. There needs to be a shock event (FDA Approval) to run the PPS up high enough for current longs to realize a return on their investment. Traders will continue to have opportunities to play the swings of course, but if you're significantly down then the FDA is your potential saviour. In other words, business as usual.