5Barz International Inc (OTCMKTS:BARZ) Corrects on Massive Volume
tags: BARZ
Yesterday interest towards the stock of 5Barz International Inc (OTCMKTS:BARZ) almost reached record levels when in the span of a single session investors shifted more than 2.6 million of the company’s shares. Unfortunately, the increased attention from the market didn’t do the stock any favors and BARZ tumbled down the chart wiping 9% of their value and closing the trading day at $0.0955 per share.
When doing your due diligence on the company it won’t take that long for the red flags to start piling up. Let’s start with the latest financial report. It covers the quarter ended March 31, 2016, and contains the following numbers:
• $296 thousand cash
• $613 thousand total current assets
• $8 million total current liabilities
• $20 thousand sales
• $135 thousand net loss
With limited cash reserves and a staggering working capital deficit of over $7 million the financial state of the company fails to inspire much confidence. Especially when you take a closer look and realize that in order to generate even those approximately $20 thousand in sales BARZ incurred costs of sales of $93 thousand. This means that they finished the quarter with a gross loss of over $73 thousand. The loss from operations for the period stood at around $1.82 million.
Then there is the continued dilution of the common stock. During the three months covered by the report BARZ sold approximately 28 million shares at $0.05 for proceeds of $1.39 million. Another 13 million shares saw the light of day as conversion of debt. This still left the company with over $2.1 million in notes payable at the end of March. With BARZ having numerous convertible notes with discounts going all the way up to 50% the issuance of underpriced shares may not be coming to an end any time soon, and the subsequent events section of the report shows exactly that. It also states that between April 1 and June 21 in order to raise some much needed capital BARZ had to sell another 18 million shares at $0.05. As a whole the outstanding shares of the company have grown from 298 million at the end of 2015 to 365 million as of June 21, 2016.
In its latest PR BARZ announced that it expects some rather spectacular revenues to start flowing in in the near future. Apparently the Indian subsidiary of the company is doing so well that it expects to report sales of $2 million for the second half of the year. For 2017 BARZ forecasts reaching revenues of approximately $10 million.
Ultimately, it is up to you to decide whether the company has what it takes to deliver on its promises and if that will be enough to offset the plethora of extremely serious red flags.
