Borislav Tonev

AwesomeStocks and Urban Barns Foods Inc. (PINK:URBF) are Enjoying the Fruits of Their Labor

by Borislav Tonev January 14, 2013
URBF.pngYou know that feeling when you see a great-looking fresh lettuce in the supermarket? It immediately catches the eye and you buy it instantly, you can't wait to get back home and cut it into a tasty salad. You do that, you open the finest wine you have around and then it turns out that the lettuce actually tastes as if it were eaten before. Urban Barns Foods Inc. (PINK:URBF, URBF message board) are familiar with the problem and they want to do something about it.

Vegetables in the supermarket taste like they have been grown near a nuclear power station because:

  • a) they have been grown near a nuclear power station
  • b) they have been grown in a farm outside the city (more likely)

This means that they have traveled thousands of miles before they can get to the salad bowl which, in turn, means that they have lost their natural taste characteristics. And URBF are here to change that. Or, at least, that is what they claim.

Just like many other small companies, they claim that they have some sort of mind-blowing, ground-breaking, patent-bending technology that nobody has ever thought of before. What they claim they have is a way of growing vegetables in warehouses inside the cities, which would mean that the freshly grown produce will need to travel only a few blocks instead of a thousand miles before it gets to the market shelves. That way the lettuce will stay fresh and will have a divine taste. Even the environmentalists will be happy because the big trucks carrying tomatoes and cucumbers around will stop. At this point everyone should be cheering, but let's not get too carried away.

We could argue that URBF are not the first ones to come up with a way to grow vegetables indoors, after all greenhouses have been around for centuries, but let's not get to that and look at the company's financials instead. This is where a somewhat pleasant surprise emerges. Sure, they are not the wealthiest company in the world, but we rarely see a penny stock enterprise that has more assets than liabilities. The figures are as follows:

  • cash: $239 thousand
  • total assets: $552 thousand
  • total liabilities: $308 thousand
  • accumulated deficit since inception: $652 thousand

3URBF_logo.jpgWhen we scrolled down a bit, however, we found that they have generated no revenue since the company started, which is a bit of a worry and it also raises the question: "How did they manage to stay afloat considering the fact that they have had no income from sales?"

The answer lies further down in the report - they have issued millions of shares during the last year. The dilution must have made their shareholder quite grumpy and some negative emotions are yet to be experienced since URBF states that they will need approximately $1.9 million during the next 12 months if they are to continue operating.

On a brighter note, they have announced that they are turning their research and development facility into a fully-fledged production plant within a matter of days, which means that some revenues will be generated soon. How soon and will the profit be enough for them to continue? Only time will tell. In any case, as far as we are concerned, it's far too early to make any cardinal conclusions about the bright (or grim) future of the company.

What harms URBF's credibility is that their shares were pumped a number of times throughout the years and the result of these promotions was always the same - a brief jump followed by a longer-lasting downfall. Having that in mind we are struggling to believe that this time, things will be different.

FSTC.pngEven more so when we take into consideration who is promoting them this time. AwesomeStocks have a lot of promotions under their belt and the list of failed "winners" is quite large. First Corp (PINK:FSTC) is a great example of AwesomeStocks "pick" turned rotten.

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