In the netherworld of risky penny stocks, reverse mergers are out and initial public offerings are back in style. Buyer beware.
By Brandon Kochkodin, Forbes Staff
About an hour by rapid train northwest of Shanghai, China in the city of Changzhou (pop: 5.2 million) are the offices of Jin Medical International, a maker of “high-end” wheelchairs. Incorporated in the Cayman Islands in January 2020, Jin’s wheelchairs are known for being ergonomic and lightweight and recently the company began making electric and ski-friendly models.
Last March, with the help of a little known New York-based underwriter named Prime Number Capital LLC, Jin Medical IPO’d on Nasdaq, raising $8 million at 40 cents per share on a split adjusted basis. While the Nasdaq 100 index, which includes market stars like Nvidia, has risen 40% in the last 12 months or so, Jin’s stock has climbed to $14, logging near 3,000% gains and a market capitalization of $1.73 billion. Though the company hasn’t filed any financial statements with the SEC since August 2023, at the time its revenues were running at about $20 million annually, with profits of around $3.5 million, giving it a price-earnings ratio in excess of 500.