x min read

Kraig Biocraft Laboratories Inc (OTCMKTS:KBLB): Commercial Sales Beckon

Kraig Biocraft Laboratories Inc (OTCMKTS:KBLB): Commercial Sales Beckon
Written by
Chris Sandburg
Published on
January 23, 2017
Copy URL
Share on LinkedIn
Share on Reddit
Share on Twitter/X
Share on Facebook
InsidrFinancial

Kraig Biocraft Laboratories Inc (OTCMKTS:KBLB) is one of those companies we have come back to a number of occasions across the last twelve months. It has a bit of an unusual business model, but one that potentially could generate some decent long-term returns, and in turn (and especially at its current price), could offer shareholders a nice cut price exposure to a growing company.Kraig is up a little over 45% year-to-date, and we think there is plenty of run room for the remainder of the first quarter. Here is what we're watching, and where we are looking from an update perspective as indicative of further upside potential.First, a quick introduction to the company.Kraig bills itself as a biotechnology company, but it is not your traditional health care entity. Instead, the company harvests silk from spiders, and specifically, uses genetically engineered spiders to create certain types of silk that have the potential to outperform the natural material used in clothing. It's lead product right now is what's called Dragon Silk, and this product is the primary driver behind the company's upside momentum in recent periods. Why? Because last year, Kraig entered into a test agreement with the US military that could see it awarded a government contract. Government contracts are gold dust for a company of this size, and if awarded, could be a real game changer for Kraig near-term.Last time we looked at the company, it was working towards supplying the US military with the first batch of test material associated with this arrangement, which the latter is going to use as a material with which to create shoot bags. Mid-December, the company announced that it had completed the first phase of its Dragon Silk fiber production associated with this military contract, and expected to make final delivery to the US Army in the second quarter of 2017.This is important for two reasons.First, that it marks the beginning of the testing period for the material, and – in turn – opens the door to potential catalysts on feedback from this test. We don't expect feedback very soon, but at some point over the next couple of quarters, we should get some insight as to military uptake of the material, and this should filter through to valuation.The second reason, and perhaps more importantly near term, it opens the door to commercial sale of the company's lead products. Until now, the majority of production has been focused on providing the US military with its test material. This put commercialization on a bit of a back burner. With commercialization now very much in focus, Kraig can start building its topline, and adding value.A more recent announcement underscored this expansion in production to provide the company with commercialization material, and will see a facility opened in Vietnam as a supply center.It's worth noting that the military contract is just a test, and there are likely a number of other materials under investigation as part of the same study. As such, it may not come to anything for Kraig. For us, this is a key near term risk, and one on which the company could take a real hit if the military turns down its option.With that said, the commercial prospects for the material are pretty expansive, and we expect 2017 should see Kraig improve its topline dramatically, and start to expand pretty much all aspects of its operations. As it does, we expect market capitalization to increase proportionately.Cash isn’t great, but it's not terrible either, reported at a little over $335,000 at September 30, 2016. We don't see dilution as too much of a risk near term, but expect a raise towards the end of 2017.We will be updating our subscribers as soon as we know more. For the latest updates on KBLB, sign up below!Disclosure: We have no position in KBLB and have not been compensated for this article.

Discover Hidden Gems

Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.