Georgi Kamburov

Kraig Biocraft Laboratories Inc (OTCMKTS:KBLB) Flies Higher

by Georgi Kamburov July 18, 2016

The stock of Kraig Biocraft Laboratories Inc (OTCMKTS:KBLB, KBLB message board) continued its meteoric rise up the chart during Friday's trading. It soared upwards by 11% and climbed to a close at $0.0416. The last time the company traded at such prices was over a year ago in May 2015. With the daily volume for the session reaching 4.4 million, which is four times higher than the monthly average, it is clear that the excitement towards the stock remains strong.

The catalyst for the sudden burst in interest and the strong support displayed by the market is the July 12 press release of the company. In it KBLB announced a contract with the U.S. Army valued at "up to $1.0 million". For a pennystock to receive such a contract is no small feat but jumping in without doing the necessary due diligence may be rather dangerous.

Taking a closer look at the PR reveals that out of the $1 million mentioned in the contract for now KBLB will receive about $100 thousand for several ballistic shoot packs made from its Dragon Silk material. These shoot packs will undergo 10 months of testing by the US Department of Defense.

Still, even these $100 thousand represent a massive step forwards for the company. After all, KBLB have been unable to register even a dime in revenue for the past two years despite the fact that in 2013 they announced that commercial scale production might be starting soon. According to the latest financial report KBLB finished the quarter ended March 31, 2016, with:

• $187 thousand cash
• $187,252 thousand total current assets
• $2.38 million total current liabilities
• ZERO revenues
• $509 thousand net loss

As a result of the price gains from the last four sessions KBLB's market cap has almost reached $30 million, valuation that the fundamentals of the company may not be able to support for long.

Investors have a lot more to worry about, though. The stock's surge might tempt the owners of millions upon millions of extremely underpriced shares to start dumping them on the market. Since the start of the year around 18 million shares have been sold at $0.018 per share for $300 thousand in proceeds. Even scarier are the 9.5 million shares that saw the light of day as cashless exercises of warrants.

KBLB's stock has appreciated significantly over the past four sessions and chasing after it is getting increasingly riskier. Don't underestimate the red flags and commit to trades only after doing your own research. 

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