Bemax Inc (OTCMKTS:BMXC) shares jumped 26.92% on Friday to $0.00660 and an additional 13.29% in after-hours trading to $0.00748. The company has a market cap of $1.71 million at 258.79 million shares outstanding. Share prices have been trading in a 52-week range of $0.00 to $1.00.
Bemax Inc is a development-stage company that is focused on exporting and distribution of disposable baby diapers. It exports disposable baby diapers from the United States and Canada, and distributes them in London, and South Africa. It also exports from manufacturers from Asia and distributes to other parts of Africa.
The company’s stock has been on a sharp drop recently on its attempts to raise capital through a complex share offering on the resale of up to 25,000,000 shares of the company’s common stock by Kodiak Capital Group, LLC. These are put shares of Bemax Inc pursuant to the Equity Purchase Agreement, which provides that Kodiak is committed to purchase up to $2.5 million of the company’s common stock.
This agreement was filed last month when Bemax Inc stock was still trading at $0.07 per share, which would result in massive dilution. However, bullish momentum was revived when news broke out that the deal was cancelled as investors no longer worried about dilution.
“We are into a lucrative market in a growing country. The current population fertility rate increased presents an opportunity for Bemax Inc. to enter and penetrate the disposable baby diaper market. Bemax Inc. is poised to take advantage of this growth rate and minimal local competition, with a dedicated and experienced staff, excellent order procurement, and effective management and marketing. The initial intention will be to distribute disposable baby diaper to wholesalers, and local market retailers throughout South Africa,” stated company materials.
Bemax Inc also went on to share that they believe in staying flexible and responsive in their goal to prosper in this relatively untapped market.
Our primary goal will be to establish and strengthen our existence in the market, which will be bestowed by the business environment in which we function,” it continued. “Ultimately the attractiveness of our venture lies with the fact that customers will choose our products above those of competitors because of the relatively lower prices as well as their high quality. Hence Bemax Inc. ongoing initiatives will be to drive sales, market share and productivity so as to provide additional impetus towards attainment of the corporate goals and objectives.”
However, it’s also worth noting that Bemax Inc has little to no cash given its failed attempt to raise additional capital. This suggests that its options are limited when it comes to expansion or acquisitions that could help extend its market reach. Also, the company has $345.49K of accumulated debt and is making trailing 12-month revenues of $630.86K.
Its daily chart illustrates the massive decline in value since May this year and even though volume has considerably picked up lately, it would take a considerably strong catalyst to oppose the strong downtrend. Still, any bounce could be worth catching if positive updates follow or if the company finds new ways to raise capital. On a longer-term perspective, it still makes sense to short the stock on pullbacks from the dive.
DISCLAIMER: There is a substantial risk of loss with any speculative asset, especially small cap stocks. The opinions expressed are those of the author, and do not constitute recommendations to buy or sell a stock. Do your own research before committing capital.