SpectraScience Inc (OTCMKTS:SCIE), a medical device manufacturer, has caught the market’s attention again.
Over the last three months, more than 1 billion shares changed hands some days. As we believe that volume is a very good indicator of the market interest, we thought that our readers would like to read an assessment of this company.
Have a look at the recent share price action before we provide more details:
SpectraScience Inc was founded on May 4, 1983. The company has gone through some corporate transformations, and bankruptcy in 2004. The company was initially named GV Medical, Inc., but it changed its name to SpectraScience, Inc. in October 1992.
The company is headquartered in San Diego, California, and this is its website.
What’s the business model?
SCIE develops its WavSTAT ® Optical Biopsy System, which “employs a non-significant risk technology that optically illuminates tissue in real-time to distinguish between normal and precancerous, or cancerous tissue.”
Acquisition of LUMA Imaging Corporation
We were glad to find out that the company has not only grown organically, but it intends to acquire other companies as well. On November 6, 2007, LUMA Imaging Corporation was acquired for 11.2 million restricted shares of SpectraScience common stock. It seems that SCIE acquired intellectual property from this target, which could be used for future generations of the WavSTAT System.
The intellectual property consisted of approximately 30 issued U.S. patents, certain foreign patents, and 28 additional patent applications.
The announcements that seemed to move the market are the following.
On August 11, 2017, the company noted that the amount of authorized shares had been increased:
“The Board and Consenting Shareholders have approved an Amendment to the Company’s Amended and Restated Articles of Incorporation, a copy of which is attached hereto as Appendix A (the “Amendment”) to increase the number of authorized shares of Capital Stock of the Company to 5,000,000,000 as more fully described below.” Source
This does not mean that the company diluted shareholders. It means that the company could issue more shares. Some market participants tend to appreciate this type of announcements, as sometimes they are followed by business combinations. The volume could have increased as a result of this thesis.
It is interesting to note that a similar initiative was announced on May 8, 2017:
“The Board and Consenting Shareholders have approved an Amendment to the Company’s Amended and Restated Articles of Incorporation, a copy of which is attached hereto as Appendix A (the “Amendment”) to increase the number of authorized shares of Capital Stock of the Company to 3,000,000,000 as more fully described below.” Source
|Outstanding Shares||2,685,830,579||a/o Aug 14, 2017|
|Held at DTC||Not Available|
Source: OTC Markets
Please note that the float was not given to the OTC Markets Exchange. However, we did some more research and found in the last annual report that there are a lot of shares owned by a few big shareholders. Thus, the float, which is the amount of shares owned by the public, is low. This means that big market orders could change the share price significantly. Thus, the price volatility is expected to be large.
GPL Ventures LLC acquired a large stake in the company in February 2017. This market participant could be acquiring more shares. This would explain the increase in volume. However, until a new filing is received by the market, this is just speculation.
Currently trading with a market cap of $0.8 million, SCIE is an interesting story among small caps. With $1.2 million in assets and $13.3 million in liabilities, we believe that the company will need funding soon to sustain new innovations. The company has intellectual property and interesting technologies, thus we believe that it will not be a problem.
In our opinion, the future will depend a lot on the current management and the way they interact with other financial and strategic partners. If the company is able to find a bigger company interested in the intellectual property, the capital requirements will not be a problem.
To sum up, keep a close eye on this name, as the market is becoming more interested in it with each passing day.
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Image courtesy of NASA via Flickr
Disclosure: We have no position in SCIE and have not been compensated for this article.