Big Red Flags from Bio-Matrix and Regen Biopharma
In a previous article warning investors against the dangers of over-the-counter stocks, we highlighted 8 patterns followed by many OTC companies that fail and consequently lose investors a great deal of money. One company we came across recently that ticks almost all of these 8 boxes is Bio-Matrix Scientific Group (OTCMKTS:BMSN) and their majority owned subsidiary, Regen Biopharma.
Incorporated in 1998, Tasco International was involved in producing digital content and media until 2006 when it abandoned those efforts and became Bio-Matrix Scientific Group (OTCMKTS:BMSN). Investors who have been holding this stock since 2006 would have lost -99.77% of their money as of today. Bio-Matrix owns 98% of Regen Biopharma Inc, a company that is “focused on identifying undervalued regenerative medicine applications in the stem cell space”. The Company’s IP consists of US Patent 8,389,708 which was granted to Regen by a member of their advisory board, Weiping Min, and also the exclusive rights to certain RNAi patents from Benitec (ASX:BLT). Bio-Matrix has three employees and a current market cap of $17 million.
According to the last filed 10-K in January 2014, Bio-Matrix has $116,714 in cash and total liabilities of $1.3 million, $612 thousand of these liabilities which are “accrued payroll”. Accrued payroll increased by 98% in 2013, $351, 500 of which was back pay for the $290,000 yearly salary paid to the CEO, David Koos. General and administrative expenses for the year ending September 2013 were $1.3 million, while R&D spending totaled $9,509. The company has 2.95 billion shares outstanding and has issued almost 2 billion shares since December 2012 for indebtedness, accrued interest, accrued salaries, consulting services, etc. It should go without say that the company also has no revenues.
In the latest 10-K and on LinkedIn, the CEO and Chairman of Bio-Matrix, David Koos, is also listed as the CEO, Chairman, President, and CFO of Entest Biomedical since 2009 to present:
Entest Medical (OTCMKTS:ENTB) is an over-the-counter (OTC) company with 1.5 billion shares outstanding and a current share price of .0005. That equates to a current market cap of $576,000. If you bought shares in Entest exactly 1 year ago, you would have already lost -90% of your investment.
You may ask just who would invest in this “company” given the vast amount of conspicuous red flags observed in the 10-K, however as of December 2013, there were 463 investors still holding shares in Bio-Matrix. These investors should review our list of consistent patterns followed by OTC companies that fail:
- Founded through reverse merger? Yes
- Possesses patent(s) that is offered as proof of potential? Yes
- Talks about an exciting opportunity as opposed to actual progress made? Yes
- Touted on stock boards? Yes
- Constructive criticism met with accusations of short selling? Yes
- Lack of significant (or any) revenues? Yes
- Identify other technology focus when all else fails? TBD
- Issuing shares until share price collapses? Well on its way
It goes without say that having senior management who are affiliated with failed OTC companies in the past should be a big warning flag as well. While Bio-Matrix (OTCMKTS:BMSN) investors may believe they are investing in a disruptive technology company, in fact it appears that this could not be farther from the truth.
Are you paying too much in transaction fees to your broker? Check out a brokerage firm called Zacks Trade that's offering $1 trades on U.S. stocks and options for an entire year. After that, you'll pay just $3 a trade or a penny a share, whichever is greater. It's one of the cheapest brokers out there and we use them to trade stocks on over 90 foreign stock exchanges. Open an account today and get $1 trades for a year.