GBSN and AEZS appear to have many similarities of late; however, in my opinion, GBSN is the leader of the two and merits a bit of attention by the avid stock trader. In comparing the two companies, I’ll explain how I came to this realization.

AEZS State Of Affairs

You may or may not be familiar with AEZS. If not, here is some information on the company’s recent goings-on. Several months ago, AEZS had warrants that expired, flooding the market with tens of millions, even hundreds of millions, of shares.

Subsequently, all the shares that went up for sale drove the price down from US$5 or US$6 a share to pennies, approximately 5 or 6 cents a share.

For those who don’t know what a warrant is, it’s a unit of shares a company issues to raise money. For example, if a stock has warrants that expire at a price of US$4 a share, the company can either pay its investors US$4 a share to cover those warrants, or it issues shares of company stock. If the company stock is below the warrant price of US$4, the company must make that up in shares equivalent to the US$4 price. In other words, if the company’s warrants are, for instance, 2 million shares at US$4 each and the current market price is 7 cents, for each warrant issued, the company has to give each investor 57.14 shares (at 7 cents a share to equal the warrant price of  US$4 a share).

So, as you can see, when a warrant expires, it can be extremely detrimental to a company and create vast dilution.

In recent days, AEZS has gone through a 1 for 100 reverse stock split. AEZS had 632.7 million shares outstanding, pre-stock split. Post-stock split with the 1 for 100 reverse, it currently has 6.327 million outstanding shares.

AEZS has also taken care of all outstanding warrants and has become a low-float stock. This is why I believe its stock price has been running … because it has boosted investors’ confidence.

GBSN’s Position

GBSN encountered the same situation a few months ago. Its warrants had expired at approximately US$2.50 a share. At that time, the price of the stock was trading at around US$2 to US$3 a share. When the warrants hit, millions of shares came up for sale, driving the price down over a few months to 5 or 6 cents a share, having the same reaction to the stock price as AEZS.

In a filing to the SEC on Nov. 23, GBSN addressed the warrant issues and announced it would have a 1 for 50 or 60 reverse stock split. So as you can see from AEZS’s experience, investors are also confident that GBSN can make it through these difficult times. As of now, GBSN has 190.7 million shares outstanding. GBSN has also announced it will raise that to 900 million shares outstanding and then enact a 1 for 50 or 60 reverse stock split. That would leave the company with an outstanding share count of 15 to 18 million.

Issuing additional shares from 190.7 million up to 900 million is how GBSN is going to manage the expired warrants that drove the stock price down.

In summary, AEZS has met all of its financial obligations to get its stock back on the right path. GBSN, like AEZS, hasn’t had its reverse stock split yet. However, I believe investors recognize that GBSN has taken care of its obligations, and investors are buying in early.

Why I Believe GBSN Is A Better Buy

Unlike AEZS, GBSN has FDA-approved products on the market with 143 current customers and numerous prospective customers from more than 3,000 smaller hospitals across the United State. Moreover, it has real earnings, as well additional products in the pipeline to be FDA approved. One is expected to be approved within the next week or two, and the others will gain approval by the second quarter of 2016.

As you can see, with GBSN’s earnings and potential earnings on its considerable portfolio of products, I believe it is light-years ahead of AEZS, which has little to no earnings.

In retrospect, and doing my due diligence, GBSN investors are piling in a littler earlier than they did with AEZS because it has met all of its obligations. While I am not a professional trader and my numbers may not be exact, I truly believe this is why GBSN is currently running.

I have followed Timothy Sykes for many years, and I view him as one of the best stock teachers I have come across. It has taken me many years to learn what I have in trading. I traded during the .com boom in the late 1990s and have been on a rollercoaster of near riches to near poverty many times over the years. I’m still learning every day, and I’d like to give a shout out to Tim for his wealth of information.

Now a lot of people think he’s brash and arrogant, but he clearly has the wallet and knowledge to back it up. Tim is straight up, and he tells you like it is … no BS. His risk/reward ratio is one of the best in the business. When he gets in a stock, there is usually very limited downside and considerable potential upside. He rarely has big losses, and he consistently makes profits day in and day out. When you first meet him, it may be hard to take him seriously, but if you listen very carefully and pay close attention, you’ll soon realize he knows what he’s talking about and has the expertise to steer even the most inexperienced traders in the right direction. I admire his aptitude for trading, and he’s certainly one of the best teachers in this arena. In simple terms, the man knows how to trade. I credit him with escalating my knowledge over the years. So once again, thank you, Tim, for your teachings.

Disclaimer: I am not affiliated with AEZS or GBSN, and this is in no way investment advice, just purely my opinion based on my stock-trading experience.

Gregg Monhollon