5Barz International Inc (OTCMKTS:BARZ) Continues To Decline
tags: BARZ
Out of the last 6 sessions the stock of 5Barz International Inc (OTCMKTS:BARZ) has suffered 5 red closes. During yesterday’s session it corrected by 8% but the losses could have been much steeper – right before the closing bell the stock was sitting at $0.067 and only a last minute jump brought it up to $0.0736. The traded volume for the session surpassed the monthly average of 371 thousand by more than 5 times and almost reached 2 million traded shares.
On July 13 BARZ submitted their financial report for the first three months of the year and taking even a quick glance should give you plenty of reasons that could explain the current downtrend of the stock. Let’s start with the financials – as of March 31, 2016, the company had:
• $296 thousand cash
• $613 thousand total current assets
• $8 million total current liabilities
• $20 thousand sales
• $135 thousand net loss
It is difficult to get excited when you see that just a couple of months ago BARZ had a staggering working capital deficit of over $7 million. The fact that the company reported cost of sales of $93 thousand, amount that is nearly 5 times higher than the actual revenues, makes the picture even grimmer. The company expects the future to be far more lucrative, though. For the second half of 2016 BARZ has stated that it could generate about $2 million from its Indian subsidiary. As for 2017 it forecasts reaching revenues of $10 million.
Investors, however, have far more to worry about. During the period covered by the report BARZ sold approximately 28 million shares at an average price of $0.05 for proceeds of $1.39 million while the subsequent events section of the report shows that another 18 million shares had been sold at the same price by June 3. Don’t forget that BARZ has a multitude of outstanding notes some of which can be turned into shares at discounts going all the way up to 50%. During the three months ended March 31 around 13 million shares were issued through conversions.
When doing your due diligence on the company you might want to also check page F-24 of the quarterly report. It reveals that since the start of the year several complaints have been filed against BARZ.
With 365 million outstanding shares out of the 400 million authorized as of June 21 the company might soon find itself running out of room for the issuance of fresh shares and this could force it to increase its authorized amount. The red flags surrounding BARZ demand the use of caution when dealing with their stock. Plan your trades carefully and before you commit to anything you should do sufficient research.
