Bemax Inc (OTCMKTS:BMXC) is a micro-cap name that has been swamped over the past several months, dropping from nearly $1/share at one point this past Summer to a recent price around a half-penny per share. The recent drama surrounds an attempt to raise capital through a complex share offering centered around the resale of up to 25,000,000 shares of the company’s common stock by Kodiak Capital Group, LLC, which are Put Shares that the company planned to Put to Kodiak pursuant to the Equity Purchase Agreement.
The EP Agreement with Kodiak provides that Kodiak is committed to purchase up to $2.5 million of BMXC common stock. This was filed in mid-November when the stock was trading at about $0.07/share. The key point is the coming massive dilution that would have been implied by this deal (“Kodiak will pay us 80% of the lowest closing price of our common stock for the two trading days immediately following the closing date associated with the applicable Put Notice”) given that the stock is now trading well below a penny. However, the interesting news hit just last week that the deal was canceled. We assume this was because the math no longer worked out given the 90% drop in the stock in the past couple weeks. That removes the immediate dilutive threat, potentially setting up a bounce.
Bemax Inc (OTCMKTS:BMXC) trumpets itself as a company that engages in the distribution of disposable baby diapers to distributors and wholesalers in Europe and South, East, and West Africa. The company was founded in 2012 and is based in Dallas, Georgia.
According to company materials, “Bemax Inc., is a United States company actively pursuing opportunities in the rapidly growing global Consumer Staples and Household Products Industries. Bemax markets and distributes household products of companies positioned to make a significant impact within the consumer staples market.
“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
“We realize the fact that for us to prosper in this relatively untapped market, there is need to be flexible and responsive, to delight our customers by providing them with what they want, when they want it and in the exact quantity. 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.
“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.”
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As noted above, the recent offering was canceled, which theoretically cancels the dilution that was inherent in that deal. Volume is coming back in the stock at current levels. We expect there is at least some possibility that the ticker is being relegated back into shell status and readying to serve another role.
If not, we can’t imagine what the next step will be here.
That said, market participants may want to pay attention to this stock. BMXC is a stock whose past is littered with sudden rips. In addition, the listing has witnessed a pop in interest, as transaction volume levels have recently pushed nearly 2300% beyond what we have been seeing over the larger time frame.
At this time, carrying a capital value in the market of $1.7M, BMXC likely has little or no cash remaining given its distressed status, which stands against an appreciable load ($345.49k) of total accumulated debt. But the company is making real money, with trailing 12-month revenues coming in at $630.86k. If you want to take a look at something priced to fail, this is your horse. If there is so much as a breath of good news, the stock will be in orbit, even though it’s not easy to see what that might be at this point. Nonetheless, this may be a very interesting story and we will look forward to updating it again soon. For continuing coverage on shares of $BMXC stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!