Small cap medical technology stock Sanomedics International Holdings (OTCMKTS: SIMH) recently completed financing and an acquisition while JinZangHuang Tibet Pharmaceuticals, Inc (OTCMKTS: JZHG) surged 48.28% on Friday. However, that’s only part of the story as one of these stocks has been the subject of paid promotions while the other has no new news for investors. So are either of these small cap stocks the cure for any portfolio pains you may be suffering from? Here is a quick reality check:
Sanomedics International Holdings (OTCMKTS: SIMH)Completes Financing and an Acquisition
Small cap Sanomedics International Holdings is a medical technology holding company that focuses on acquiring sleep therapy operating businesses in order to integrate a portfolio of world-class products and service providers in the growing Sleep Apnea market. On Friday, Sanomedics International Holdings fell 7.14% to $0.260 for a market cap of $7.42 million plus SIMH is down 90.7% over the past year and up 1,525% over the past five years according to Google Finance.
What’s the Catch With Sanomedics International Holdings? According to various disclosures, transactions of $12.5k, $13k and $55k have or will occur to mention Sanomedics International Holdings in various investment newsletters. Earlier this month, Sanomedics International Holdings announced that William Lerner, Esq., a board member of the Company since March 2013, has been appointed to serve as the chairman of the executive board of the Company. The press release noted that he will help position the company for a listing upgrade and strengthen its corporate governance requirements. At the beginning of the month, Sanomedics International Holdings announced the completion of its previously announced acquisition of Prime Time Medical, Inc., of Largo, Florida for a total purchase price of $3,100,000. The closing price was amended to include the issuance of 531,250 common shares of Sanomedics International Holdings, $1 million in debt and $1,250,000 cash consideration with $400,000 paid through closing and the balance of $850,000 in a promissory note payable within 30 days (Note: In late August, Sanomedics International Holdings entered into a financing term sheet with MC Healthcare Finance LLC for a total $5,000,000 Credit Facility, consisting of a $3,000,000 revolving line of credit and a $2,000,000 term loan). A quick look at Sanomedics International Holdings’ income statement reveals revenues of $64k (most recent reported quarter), $57k, $59k and $1k along with net losses of $2,130k (most recent reported quarter) and $440k, net income of $127k, and a net loss of $865k. At the end of June before the August announced financings, Sanomedics International Holdings had $72k in cash to cover $4,156k in current liabilities and $5,290k in total liabilities. So perhaps investors should wait for one or two more quarters worth of financials to come out before jumping in.
JinZangHuang Tibet Pharmaceuticals, Inc (OTCMKTS: JZHG) Surged 48.28% on Friday
Small cap JinZangHuang Tibet Pharmaceuticals is a China-based company that distributes Tibetan pharmaceutical and nutraceutical products. On Friday, JinZangHuang Tibet Pharmaceuticals surged 48.28% to $0.215 for a market cap of $7.35 million plus JZHG is up 95.45% since last November and up 43.3% over the past five years in intermittent trading according to Google Finance.
What’s the Catch With JinZangHuang Tibet Pharmaceuticals? According to various disclosures, no transactions have occurred to mention JinZangHuang Tibet Pharmaceuticals in various investment newsletters. I am also not seeing any recent news beyond filings that would explain the sudden share price surge on Friday. A quick look at JinZangHuang Tibet Pharmaceuticals’ financials reveals revenues of $4,263k (most recent reported quarter), $4,044k, $3,334k and $2,717k along with net income of $2,325k (most recent reported quarter), $2,202k, $1,833k and $1,443k. At the end of March, JinZangHuang Tibet Pharmaceuticals had $16,365k in cash to cover $986k in current liabilities and $1,799k in total liabilities. Those financials look great, but investors may need to take them with a few grains of salt given past bad experiences involving Chinese small cap stocks.