Dragni Dragnev

Generex Biotechnology Corporation (OTCMKTS:GNBT) Makes A Return

by Dragni Dragnev January 28, 2016

Investors seem pretty excited about Generex Biotechnology Corporation (OTCMKTS:GNBT, GNBT message board) – enough to push the ticker 58.62% up in yesterday's trading. But is their enthusiasm really warranted? 

Although the current peak in investor activity has certainly opened windows of opportunity for profit, even the boldest traders looking for a quick profit must never forget what the company's actual situation is.

Ultimately, it may be hype caused by exposure that pushes a ticker up in a blast of investor interest, but it is fundamentals that decide whether or not the gains made in that surge are retainable. So let's look at some numbers, shall we? 

Here's an excerpt from the financial report GNBT published less than two weeks ago:

  • Cash - $52 thousand
  • Total Current Assets - $104 thousand
  • Total Current Liabilities – $8.5 MILLION
  • Still No Revenues
  • Net Loss - $1.7 MILLION

Those numbers sort of speak for themselves, telling investors prudent enough to pay attention a great deal about GNBT's current situation, and overall nature. Still, even said numbers don't speak as loudly and clearly as some other details that can be found in the report.

Try searching the word “convertible” in said report. It pops up a whopping 134 times, and although the company doesn't seem to suffer from one of the biggest plagues of OTC Markets investor value – toxic promissary notes, it does appear that GNBT is overly fond of issuing convertible preferred stock at unreasonably low prices.

Investors are advised to note well the fact that although just under 90 million of the 870 million GNBT shares currently outstanding have entered into circulation since Dec. 2014, the company's shares authorized have been bumped all the way to 2.45 BILLION.

This is why investors can't afford to ignore the threat of dilution – carelessness in such situations could prove disastrous.

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