Intro:
Another week, another short report on a so-called “dubious” publicly traded company. This week it is Akers Biosciences, Inc.’s turn. Yesterday, its share price closed 147% higher than last week’s closing price and trading volume saw an all-time record level surpassing 57 million. This volume is simply ridiculous when one bares in mind that the number of outstanding shares stood at 540,000 on December 31, 2019. Like many of the other tickers we have written short reports on over the last couple months, AKER’s recent and remarkable market activity can be linked to a Covid-19 treatment/vaccine. And like many of these tickers, AKER raises a few familiar red flags (and faces) such as: institutional shareholders with links to a pump and dump ring; a transfer agent that has worked with a company currently languishing in the grey market as a result of securities laws violations; a raw deal relating to its recently acquired Covid-19 vaccine license; and a recently settled class action lawsuit.
Security Details:
Symbol: AKER
Current price: $7.01
Outstanding shares: 2.7 million
Market Cap: $19.2 million
Company information:
Akers Biosciences describes itself as a company that “develop(s), manufacture(s), and suppl(ies) rapid, point-of-care screening and testing products designed to bring health-related information directly to the patient or clinician in a timely and cost-efficient manner”. It was incorporated over 30 years ago and has publicly traded for over a decade.
Recent News:
- April 6, 2020, Akers Biosciences and Premas Biotech Announce Progress in its Vaccine Development for Covid-19
- March 24, 2020, Akers Biosciences Acquires Licenses to Coronavirus Vaccine Candidate from Premas Biotech
- January 17, 2020, Akers Biosciences, Inc. Provides Notice of Proposed Settlement of Derivative Litigation
- December 11, 2019, Akers BioSciences Regains Compliance with Nasdaq Listing Standards
Financial Highlights:
AKER’s 2019 financials are not pretty. Despite keeping both debt and dilution under control during this time period, net losses have averaged $972,000 per quarter while cash and cash equivalents have averaged a relatively measly $351,000. But the most concerning recent information concerning AKER’s financial prospects relates the Covid-19 vaccine license it acquired from Premas Biotech a couple weeks ago. This event materialised because AKER entered into a Membership Interest Purchase Agreement (MIPA) with Cystron Biotech, LLC, as Cystron is the owner of the actual Covid-19 vaccine license (1). This agreement gives Cystron: $1 million upfront payment; 10% of the gross proceeds in excess of $8,000,000 raised from future equity offerings after the date of the MIPA until Cystron has received an aggregate additional cash consideration equal to $10,000,000; over 600,000 shares of common stock; and a 5%royalty on net sales.
In our opinion, this is a very big commitment from AKER’s part and shows that the company’s willingness agree to the above terms is likely an indication of its very difficult current financial situation. After all, the terms allude to AKER will relying on printing shares to finance the obligations.
Recently settled securities laws violations lawsuits:
In June 2018, was named as a defendant on class action complaint (2). The complaint alleged violations of Section 10(b) of the Exchange Act and Rule 10b-5 against all Defendants, and violations of Section 20(a) of the Exchange Act against the Individual Defendants. In particular, the complaint alleged that Defendants made false and/or misleading statements and/or failed to disclose in its first, second, and third quarter 2017 10-Qs and its 2017 10-K that: (1) Akers was improperly recognizing revenue for the fiscal year ended December 31, 2017; and, (2) Akers had downplayed weaknesses in its internal controls over financial reporting and failed to disclose the true extent of those weaknesses.
AKER ended up settling the matter in December 2019 (3).
A familiar institutional investor:
One of AKER’s more notable institutional investors is Hudson Bay Capital Management (4). Hudson Bay Capital has been mentioned in a few of our short reports, so many actually that we wrote an investor warning highlighting the fund’s legal ordeals as well as the massive downside the vast majority of its “investments” end up experiencing. In summary: Hudson Bay Capital settled SEC administrative proceedings for securities laws violations in September 2013 (5); one of its managing partners has been mentioned in a subpoena that is part of an SEC investigation into an alleged pump and dump ring; and the average downside of all the companies (excluding shells) with which it has filed a SC13 form during 2018 and 2019 stood at more than 20% on March 4, 2020.
A familiar transfer agent:
It is also worth highlighting AKER’s transfer agent, VStock Transfer, as it has been involved with a couple of companies that have gotten themselves into trouble with the SEC over the last year. BEAG is one of them, a confirmed mailer pump and dump as exposed by Michael Goode (6), that paid over $1.3 million dollar for a landing page. It ended up getting into serious trouble with the SEC, who went to suspend its trading on July 1, 2019 because of lack of accuracy of publicly available information and unusual unexplained market activity (7). BEAG now dwells in the grey market (also known as the OTC cemetery) where it currently trades at less than $0.10 after having reached $3.50 pre SEC suspension.
Red Flags:
Opinion:
AKER is not a good investment. Some of the third parties it is currently involved with are so-called “dubious”. The company has recently settled a class action lawsuit for misleading investors. Financials are not good. Dilution is very likely as a result of the agreement it has entered into in order to acquire a covid-19 vaccine licence. Recent price action and trading volume is very suspect. Stay away from this company’s unless you are a trader with experience with this type of tickers.
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- https://www.otcmarkets.com/filing/html?id=14025867&guid=BofWUp4gOAthmth
- http://securities.stanford.edu/filings-documents/1066/ABI00_17/2018613_f01c_18CV10521.pdf
- http://securities.stanford.edu/filings-documents/1066/ABI00_17/20191220_f01x_18CV10521.pdf
- https://www.otcmarkets.com/filing/html?id=13838384&guid=BofWUp4gOAthmth
- https://www.sec.gov/news/press-release/2013-182
- https://www.goodetrades.com/2019/06/blue-eagle-lithium-beag-is-newest-mailer-pump-dump/
- https://www.sec.gov/litigation/suspensions/2019/34-86271-o.pdf
