Kraig Biocraft Laboratories Inc (KBLB)

[Cee-It]

From my perspective they will not be able to justify the current market cap in the future. I doubt very much that they will operate a profitable silkworm farm. That is a slim profit business for small operators and there is an intensive capital requirement for growth. If they do achieve a profit it will not produce justification for the costs and invested capital IMO.

What may happen, if they are quick enough to change their business model, is they can achieve some licensing income. However, at their spending rates and considering the costs involved, I doubt if they can achieve wide spread licensing at margins significant enough to justify the market cap here. This is a niche market (yet to be established) opportunity, not a displacement of the silk industry opportunity, IMO.

Best case business model IMO, if these worms are really a "super production and highest quality machine" would be the case of producing cocoons in mass numbers and acquiring the farm infrastructure needed to do that (most likely as a joint venture in an existing farm)... then sell the cocoons into the production markets. Finding the right business partner in the existing business, one you can trust, and locking the technology into a contained farm without access to the worms for any others, and then if the profit split is enough you might "someday" be justifying the added development and research needed to hit some of the niche markets. In this scenario then someday you may get your money back.

Companies that own market share do not cave into new entries. They find a way to lower their costs, improve their market infrastructure, keep their customers and "fight back". The odds of KBLB taking any significant percentage of the existing silk market are IMO in the realm of 50 to 1 against them, and such success will take a decade at least.