Here’s Why Akers Biosciences Inc (AKER) Shares Are Collapsing


Shares of health testing and screening products maker Akers Biosciences Inc (NASDAQ:AKER) are collapsing – down over 60% as of this writing. The reason? Akers announced this morning that it will be selling huge amount of shares of its own stock to raise cash for working capital, product development, marketing activities, expanding its internal sales organization and further developing sales channels and other capital expenditures.

The securities offered by the Company consist of (i) Class A Units consisting of 15,500,000 shares of our Common Stock and Warrants to purchase 15,500,000 shares of Common Stock, at a public offering price of $0.15 per Class A Unit, and (ii) Class B Units consisting of 3,675 shares of our Series B Convertible Preferred Stock, with a stated value of $1,000, and convertible into an aggregate of 24,500,000 shares of Common Stock, and Warrants to purchase 24,500,000 shares of Common Stock, at public offering price of $1,000 per Class B Unit. The Warrants will have an exercise price of $0.1875, will be exercisable upon issuance and will expire five years from the date of issuance. The Company has granted the underwriters a 45-day option to purchase additional shares of Common Stock and additional Warrants to purchase shares of Common Stock, in amounts up to 15% of the Common Stock, Warrants, and Common Stock issuable upon conversion of the Series B Preferred included in the Class B Units sold in the offering.

In other words, added to its current 8.9 million shares outstanding, this offering promises to dilute existing shareholders by as much as 476% (without considering warrants conversion).

Another reason investors are selling off Akers stock is the price at which these new shares are being offered. At $0.15 a share, the company is offering new stock for a price 64% below what its shares cost prior to the offering announcement – about the same amount that the stock is down today.

On the other hand, these new shares won’t just raise the share count but they’ll also raise cash. Akers expects the sale of these new shares to help shore up its balance sheet by generating as much as $6 million in new capital, excluding the proceeds, if any, from the exercise of the warrants.

The offering is expected to close on December 21, 2017, subject to satisfaction of customary closing conditions.

Akers is the developer of health information technologies. It engages in the developing, manufacturing, and supplying screening and testing products to deliver healthcare information to consumers and healthcare providers. Its products include clinical diagnostics, safety diagnostics, wellness products, and tests in development.

 

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