Borislav Tonev

Skyline Medical Inc (OTCMKTS:SKLN) Marches On

by Borislav Tonev September 10, 2013
4SKLN.pngWe wrote a couple of articles about Skyline Medical Inc (OTCMKTS:SKLN, SKLN message board) back at the end of last month when there was a free promotional campaign carried out by a couple of newsletters. We mentioned in our coverages that SKLN appears to be somewhat different compared to the larger portion of penny stocks featured in the pumpers' emails and that leads us to the most logical question of them all: "They are different, but is the chart movement different?".

Well, our first article went online a couple of hours before the opening bell on August 27 and on that day, SKLN registered quite a session. The ticker opened at $0.305, made an impressive rally all the way to $0.47 and settled down to $0.42. The next day, however, wasn't quite as exciting. There were some new alerts over the email, but even so, SKLN gapped down at the open, failed to make a significant move in the right direction and by the end of the day, it had dropped to $0.36. At this point, other pumped small cap companies like Axxess Pharma Inc (OTCMKTS:AXXE) and Rjd Green Inc (OTCBB:RJDG) would have just plowed straight into oblivion taking thousands of dollars worth of investments with them, but SKLN managed to sustain a more steady behavior.

Indeed, there were a couple more red sessions and the price reached a low of around $0.33 on August 30 but since then, it has been on the rise. Yesterday it added a further 3% and closed the session at $0.39 with an intraday high of $0.44. So, in conclusion, we can say that, when compared to the rest of the pumped small cap companies, SKLN is quite a bit different both in terms of operations and in terms of stock performance. What about long-term growth?

Well, there are a couple of things that might hamper the company's progress. The first one is the threat of future promotions. At prices ranging from $0.30 to $0.40, the ticker is bang in the middle of the pumpers' range being neither too pricey, nor too cheap and volatile. In addition to this, the interesting business plan and the relatively good outlook could be quite convenient in case someone decides to be overly optimistic about the future. SKLN managed to go through the first campaign relatively unscathed (at least so far), but there can be no guarantees that the next one will be quite as uneventful. Not least because, as we mentioned earlier, there are some convertible notes that can be easily turned into common shares at some tasty discounts which could give the note holders a chance for some quick and easy profits.

The rest of the risks are pretty much valid for virtually all the penny stocks out there. Although SKLN have managed to put their operative fluid collection and disposal system on the market, they have yet to achieve profitability and the rather big working capital deficit could also put a spoke in their wheel. What's more, we read in the 10-Q that the gross profit margin for the first half of 2013 has decreased slightly when compared to the same period of 2012 and even if the sales do increase, there can be no guarantee that the proceeds-to-expenses ratio will be improved.

3SKLN_logo.pngIn addition to this, the stock issuance from days gone by has been at odds with certain preemptive shareholders rights outlined in The Minnesota Business Corporation Act which, according to the 10-Q, "could result in claims" against the company. Hopefully SKLN will manage to avoid such problems since, unlike other small cap enterprises (Global Earth Energy Inc (OTCMKTS:GLER) is a prime example), they don't appear to be relying on artificial hype and optimistic press releases alone to get their stock off the ground. Yesterday, for example, they announced that they have received some more orders for the Streamway Systems from an established Virginia-based orthopedic practice called Advanced Orthopaedics. Now, it's up to SKLN to complete the orders and make some money out of them. We'll be sure to keep an eye on the future filings and see if they will be successful.

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