A downward spiral that began in May threatens to push Cellcube Energy Storage Systems Inc. (CNSX:CUBE) to all-time lows. The stock has lost more than 50% in market value over the past two months. The spiral can in part is attributed to growing concerns about the company’s growing debt levels as well as stock dilution.
Cellcube Price Action
Over the past few months, the company has accumulated a substantial amount of debt at a time when it is yet to affirm its revenue generation capabilities. In defense of the refinancing drive the company’s Chief Executive Officer, Mike Neylon, insists that new capital injection will help accelerate the company’s path to sustained revenue and cash flow.
It appears investors are not buying into the company’s defense depicted by the stock’s poor performance. Cellcube Energy Storage is currently trading in a steep downtrend and susceptible to further decline having broken a key support level.
After dropping below the $0.23 mark, the stock look set to fall to the $0.14 mark, seen as the next substantial support level. A breach of the $0.14 mark should open the door for the stock to drop to the $0.10 mark. Any bounce back is expected to face stiff resistance at the $0.23 mark, above which the stock could rally to the $0.28 mark.
About Cellcube Energy Storage
Cellcube Energy Storage casts itself as a leading integrated resource and energy storage company following the acquisition of Gildemeister Energy Storage GmbH. Together with its other wholly owned subsidiaries, the company is planning to deliver fully integrated energy storage solutions to be used by independent power producers.
Why is Cellcube Energy Storage Tanking?
Investor confidence in Cellcube Energy Storage appears to have taken a hit on the company issuing a substantial amount of common shares all in the effort of raising additional capital. Issuance of shares goes a long way in triggering stock dilution in addition to soaring a company’s debt levels.
The company started the month with a debt offering, on announcing plans to raise up to $2 million in gross proceeds on the issuance of 10 million units. The units on offer comprise of one share of the company and one-half of one common share purchase warrant. The company has priced the offering at $0.20 per unit
“This financing, together with our working capital and the previously announced tax refund in the approximate amount of $1.67 million, will solidify the Company well into the new year,” commented Mike Neylon, CEO of Cellcube.
The offering comes just days after Cellcube Energy Storage announced the termination of announced financing worth $15 million from Alumina Partners. Under the terms of the agreement, Alumina Partners was to purchase CDN$15 million of units of the company. In defense of the cancelation, the integrated resource and Energy Company said it walked away in a bid to prevent further dilution of the stock
Amidst the stock dilution and debt accumulation concerns, Cellcube Energy Storage is to be refunded up to CDN$1.7 million by Austrian Authorities. The refund is in relation to certain transactional taxes and fees as part of the company’s May 1, 2018 acquisition.
Cellcube Energy Storage intends to use the $1.67 million refund to build out its core technology of energy storage systems. The funds are also to be used to accelerate the development of next-generation products as well as customer development.
Amidst the spiral in share price, Cellcube Energy Storage has achieved an important milestone in the installation of an energy storage system in New York. The first of the two storage systems were installed at O’Connell Electric in New York and will be part of a microgrid solar plus storage system.
“We are excited to have been selected by O’Connell Electric to have them feature our Cellcube product and for them to be our North Eastern US agents. We believe that Cellcube energy solutions will quickly become an integral part of future energy infrastructure solutions worldwide,” said Stephan Schauss, Cellcube President.
In July, the company also shipped its first energy storage system to Gelsenwasser, a German municipal utility as part of the EnerPrax project.
Things are not looking good for Cellcube amidst an acquisition spree that has affirmed its credentials as an integrated resource and energy storage system company. Stock dilution and debt concerns triggered by a spree of share offering remain the biggest headwind that continues to hurt the stock’s sentiments in the market.
Given that the share price has dipped substantially it may be prudent to take a back a seat and wait for a bounce back before considering Cellcube as an investment.
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Disclosure: We have no position in CUBE and have not been compensated for this article.