Our readers should remember our last article on BREATHTEC BIOMEDIC (OTCMKTS:BTHCF), which develops innovations in the field of specialized mass spectrometry.
We featured this name, as the stock price was running and company could not say why to the Investment Industry Regulatory Organization of Canada. Our team was also not able to figure out what was happening with the stock, but we noted that the stock was a good name to be followed closely.
Right now, we believe that we did well by featuring the stock because the share price is spiking again.
From the share price level of $0.15 that we saw in November, the market again pushed up the price to cross the one-year highs of $0.42 a share. In addition, the amount of shares that changed hands was also very large; more than 1 million shares some days.
Have a look at the following stock chart and form your own opinion:
Before we continue, we need to say that we were wrong when we said that a new shareholder might disclose a significant position on this name. That did not occur. Instead, the company revealed further information in a new report that we will discuss in this new piece. We believe that it will help justify the share price appreciation. Read carefully this article until the end to get all the details.
For starters, let us provide some background. The company was created in 2015 in Canada and is headquartered in Vancouver. Its primary activity is the research in the area of breath analysis as a medical diagnostic tool. As we mentioned in our previous report, the most exciting assets are the company’s intangible assets along with the license agreements with remarkable institutions like the University of Florida Research Foundation.
Like other readers, we checked the OTC Markets website in search of news about insider buying shares. Nothing was found as of January 9, 2017. Instead, we saw that the company had released the annual report with the financial statements for the period ended August 31, 2017. Some interesting information was revealed in the new document.
First of all, the company did not receive revenues in this period, and the net income reported was a loss of $1.507 million. It is widely expected for a company focused on research and development activities to have losses, but we need to note that they were lower than that of the previous year; $6,876,788. This is a significant announcement. We saw that the company is trying to reduce the number of expenses. Check the following text that we found in the report:
“The decrease in loss is mainly due to … lower share-based payments, lower shareholder communication expenses, lower marketing expense, lower professional fees, higher research and development expenses offset by the impairment loss.“ Source
The balance sheet looks much better. It shows $1.11 million in cash, $0.077 million in intangible assets, and $1.305 million in total assets. The total liabilities are lower than the total amount of assets and were reduced. From $0.114 million, the figure went down to $0.038 million. This is excellent news, as the financial risk supported by shareholders was reduced. Consequently, the intrinsic valuation of each share increased.
For those interested, the weighted average number of common shares outstanding this year is equal to 51,334,289 shares, while this figure was equal to 35,264,222 shares in last year.
What’s going on in the exchange?
We continue to believe that something should have been going on with the company. The annual results were beneficial for the share price, but we don’t think that they could create such a large share price move. We are not the only ones having this opinion. In our opinion, the company believes the same. On November 22, 2017, it stated that it was unaware of any material change. That was the answer to the stock market regulator in Canada.
The company seemed to do it again.
On January 8, 2018, the company noted again that it is not aware of any material change that could make the share price move in such a manner. It was shown in a press release that appeared on the website of the company:
As we said in our previous report, until we figure out what or who is making the share price increase in such a way, we will be following the stock. A stock that commences surprising once tends to surprise even more. That’s our experience in the market.
Assessment of the Float and Conclusion
Currently trading with a market cap of $19 million, BTHCF is an exciting story among small caps. With 54,752,024 shares outstanding and a float equal to 50,485,839 shares, the float is not reduced. This means that the order book should be filled with many shares, and manipulating the stock should be remarkably reduced. That’s another factor to be included in the equation to solve this enigma.
To sum up, keep following this name if you are interested in getting to know why it is delivering incredible returns to stockholders!
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Disclosure: We have no position in BTHCF and have not been compensated for this article.
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