Borislav Tonev

Revolutions Medical Corp. (OTCMKTS:RMCP) Explodes Out of the Blue

by Borislav Tonev October 14, 2014

Revolutions Medical Corp. (OTCMKTS:RMCP, RMCP message board)'s latest press release came out on October 6 and it informed us that the regulatory organs in Mexico have allowed the import and sale of the company's RevVac safety syringes. Not a bad piece of news for a startup medical enterprise, but nobody really paid attention to it. Volumes remained dismal and although the price fluctuated a lot, it refused to get closer to the $0.01 per share barrier. Once you take a closer look at the latest 10-Q, you'll see that investors did have one or two reasons to be wary of RMCP's announcement.

Page 22 of the report tells us that a couple of years ago, the SEC filed a civil complaint against the company. Apparently, the Commission thought that RMCP have issued some less-than-accurate press releases which have helped them artificially inflate the share price. The matter hasn't been resolved yet, but we still reckon that this embarrassing piece of the company's history should be kept in mind while making your final decision.

It would appear, however, that investors aren't too bothered about RMCP's legal woes. Either that, or they simply aren't aware of them. More than 82 million shares changed hands during yesterday's session which means that the dollar volume at the end of the day stood at a whopping $1.1 million. The ticker opened the day at $0.0029 and started climbing immediately. Six and a half hours later, it was sitting at $0.035 which represents a mind-bending 1,066% in gains. An absolutely explosive performance, no doubt, but we can't help but ask an important question: “Why did the stock suddenly pop?”.

For reasons that are not particularly clear, investors now seem to think that RMCP can somehow fight the deadly Ebola virus. That's a bit strange considering the fact that the company itself has never mentioned the word “Ebola” in its filings or press releases, but the RevVac syringes are supposed to lower the spread of blood borne diseases, so we can see a connection, albeit a far-fetched one. Still, does RMCP really deserve this sort of attention?

Let's get back to the latest 10-Q and see where the company stood at the end of the second quarter. Here are the figures:

  • cash: $16,888
  • current assets: $303 thousand
  • current liabilities: $9 million
  • no quarterly revenue
  • quarterly net loss: $974 thousand

We reckon that the financials speak pretty well for themselves. While the sales of RevVac syringes should help a little bit, RMCP will have their work cut out for them clearing the humongous debt. Speaking of debt, we should probably note at this point that a major portion of the liabilities are convertible into common stock.

The terms of the notes state that the creditors can turn the debt into shares at discounts ranging from 45% to 47% and it would appear that some of them are already taking advantage of the favorable conditions. The 10-Q says that during the first half of the year, some note holders received a total of 40.1 million shares of common stock as a conversion of $345 thousand worth of debt. The conversion rate, in case you haven't calculated it already, comes in at $0.008 per share which means that the aforementioned note holders stand to make quite a lot of quick and easy money if they decide to unleash their converted shares on the open market.

Will they take advantage of the profit opportunity? We're about to find out.

Comments 0

Type the characters that you see in the box (5 characters).