GREAT BASIN SCIENT (GBSN) research, news, and more from GeoInvesting

Company description

Mon, 30 Mar 2015 04:00:00 GMT

Great Basin Scientific is a molecular diagnostics company that commercializes breakthrough chip-based technologies. The Company is dedicated to the development of simple, yet powerful, sample-to-result technology and products that provide fast, multiple-pathogen diagnoses of infectious diseases. The Company's vision is to make molecular diagnostic testing so simple and cost-effective that every patient will be tested for every serious infection, reducing misdiagnoses and significantly limiting the spread of infectious disease.

Research

Wed, 31 May 2017 15:09:24 GMT

GBSN ($0.59) - Shares have been more than cut in half since our mid April articles that highlighted management's constant shareholder dilution tactics. Unfortunately, as we disclosed, we were forced to bail on our short position too early. But it is nice to see that management is not being rewarded for what we feel to be very misguided and non-shareholder friendly moves. We hope that regulators will also eventually take notice. See our GBSN article coverage here.

Research

Mon, 08 May 2017 14:50:08 GMT

Forced to Cover GBSN Short

On Friday, we were forced to cover our short position in GBSN. On April 18, 2017 we released our bearish thesis titled, “Don’t be Deceived by Wording in Great Basin’s Debt Restructuring Announcement”. We will look to re-enter a short position as borrow becomes available.

Research

Thu, 20 Apr 2017 14:25:28 GMT

GBSND ($1.36) issued a new 8K, stating that:

GBSN repurchased the machinery it sold in a sale-leaseback transaction in 2013 to Onset Financial
The $1.2 million payment for the machines had to be financed with a related party loan, namely from the “Utah Autism Foundation” which is controlled by a GBSN director
In an unrelated transaction, an additional $3m Series B Notes was redeemed with cash from the restricted cash account

We interpret the release as a validation of our thesis because multiple stakeholders are trying to leave the scene and limit their own damages.

We suspect that the Onset Financial, the sale-leaseback partner, was afraid of GBSN going bankrupt and being left with the machinery.

Here is how a sale-leaseback works: It is a financing transaction in which business A sells equipment to business B and leases it backs immediately. In effect business A receives some cash now, business B will receive more cash over time than it paid in the transaction as business A leases back the equipment. If business A was to go bankrupt, the leaseback partner would be left sitting on the equipment. We believe this is what Onset financial was afraid of and therefore cut a deal to sell the remainder of the machines to GBSN before GBSN possibly becomes insolvent.

We view the fact that GBSN had to take a related party loan to finance the repurchase of the machinery as a strong sign that the company is running out of cash.

Lastly, more creditors left the scene by redeeming their Series B notes.

“On April 18, 2017, $3 million was released from the restricted cash accounts and returned to the holders thereof. Pursuant to the terms of the 2017 Series B Senior Secured Convertible Notes (the “Series B Notes”) the holder's principal amount of the Series B Notes was reduced on a dollar for dollar basis for each dollar of restricted cash released to the holder. Accordingly, the principal amount of the remaining Series B Notes was reduced from $6.2 million to $3.2 million.”

We noted in our previous note that GBSN stopped disclosing how much it had left in its restricted cash balance, but according to our calculations and including the recent redemptions, the amount left should be close to $4m. With the creditors unwilling to release most of the cash from the restricted account to fund GBSN operations, we think this business will likely go bankrupt soon, unless they raise dilutive capital soon.

Research

Thu, 13 Apr 2017 14:07:04 GMT

GBSN ($1.23) - Look for update soon on why we think GBSN will eventually head back to trading for pennies after completing it 5th reverse split since going public in 2014. We are short a very small amount, realizing that the stock has a history of pumping before dumping after reverse splits.

Research

Wed, 24 Jun 2015 16:36:01 GMT

Great Basin Scientific - GBSN - BYU Grant Seems Meaningless to Company's Financials

Great Basin Scientific put out a press release this morning detailing a $5M NIH grant that it received in conjunction with Brigham Young University. The release reads:

The National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health (NIH), has awarded a research grant to Great Basin Scientific (NASDAQ:GBSN; GBSNU) and Brigham Young University (BYU), to develop a rapid molecular diagnostic test direct from whole blood for carbapenem-resistant Enterobacteriaceae (CRE). The NIH research grant (R01AI116989) will play a key role in meeting the goals of President Obama’s recent National Action Plan for Combating Antibiotic-Resistant Bacteria.

There are no details regarding how the $5 million is going to be disbursed, other than it appears to be for both entities (BYU & GBSN) and could vest over a 5 year period.

Through the course of our due diligence this morning regarding this partnership, we believe the following:

This grant will not be recognized as revenue for GBSN
To the best of our knowledge, this grant is for the partnership between the two of them and will be spent by GBSN and BYU
The grant will likely offset some R&D costs
The grant will not have an immediate material impact on GBSN's financials

Lack of an accompanying 8-K with details specific to how the $5M could be disbursed and what it will be used for lead us to believe this development isn't material from a financial perspective. Until such time as we see this, we'll continue to look at the potential effect that this grant may have on revenue and will keep our members apprised of our findings.

Research

Tue, 23 Jun 2015 15:42:00 GMT

May Look to add to our GBSN Short

GBSN ($3.30) - According to the Company’s 8K filed today, it amended and restated the terms governing the Series C Warrants and Series E Convertible Preferred Stock issued by the Company. We believe that holders of these warrants and convertible preferred stocks will be able to accelerate their conversion rights. Based on our calculation, if all the Series C Warrants and Series E Convertible Preferred Stock are exercised and converted, there will be 32.7 million new shares for the company, which will result in a massive dilution for the existing shareholders. For a full summary of the GBSN story, investors can reference our April 8tharticle, “Is Great Basin Scientific Just Another Pump and Dump?”

Pump and Dump Watch

Fri, 27 Mar 2015 04:00:00 GMT

Disclosure: GeoInvesting is providing this information for your edification and in no way has any affiliation with any promoters and/or newsletters disseminating information on GBSN, nor is GeoInvesting being paid to post this information. At times, the GeoTeam may trade P&D's on a long or short basis, depending on how we feel the momentum of the stocks will be affected by the efforts of stock promoters and any ensuing dumps.