Tranzbyte Corp. (OTCMKTS:ERBB, ERBB message board)’s green streak was cut short yesterday by a 11.43% fall, as the hype around the company’s latest relevant press release finally cooled off.
ERBB has been riding the currents of the marijuana market these last couple of months. During that time, the ticker has almost always displayed the classical movement patterns of a pot-stock – rising sharply on PR and news on the latest marijuana-related developments, but quickly heading back down again when the hype surrounding the company dissipates. This is precisely what’s happening right now.
The moment ERBB’s latest climb began matches the date of the company’s announcement, that it is to “begin Shipping ZaZZZ to Four Dispensaries in Three States”. Despite the fact that almost no other information was given, this release alone managed to push the company’s stock prices from $0.0252 all the way up to $0.035. But hype and hope can only drive a ticker so high. And with nothing to show to investors, it was obvious that the company would not be able to keep this gain.
To elaborate – ERBB currently has a market cap of nearly 120 MILLION dollars, which in no way matches its commercial achievements so far. The company’s latest financial report can attest to that:
- Cash – $30 thousand in cash
- Current liabilities – $3.8 million
- Quarterly revenues – $68 thousand
- Quarterly net loss – $426 thousand
But even if one is to ignore ERBB’s poor financials, a look at the report reveals another huge red flag. ERBB has issued 274 million shares to clear debt over the first quarter of 2014, with a conversion price of $0.0005. This practice has been with the company for a long time, and it was clearly continued in the next quarter. Now, ERBB has accumulated a brand new $384 thousand in toxic debt, which can be converted at an outrageous discount rate of approximately $0.0005.
Additionally, there’s the very real possibility of the SEC suspending the company for “False or exaggerated press releases” if ERBB doesn’t keep the promises it been giving so casually. The probability that the stock will go down with the whole marijuana stock branch if another wave of suspensions hits the sector is also worth noting.
Consider all of these factors and it should be obvious why ERBB is currently turning red.
Other prominent pot-stocks seem to have fared better than ERBB during yesterday’s session. Terra Tech Corp. (OTCMKTS:TRTC) climbed 8.51% up the charts, and Creative Edge Nutrition Inc. (OTCMKTS:FITX) made an impressive 14.70% jump.
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