Growblox Sciences Inc. (OTCMKTS:GBLX) Bolts Up Then Steps Back

Growblox Sciences Inc. (OTCMKTS:GBLX) exploded all the way up to $2.50 yesterday, on the news that it had gained a “special use permit” in Clark County, Nevada for its future medical marijuana establishment. Unsurprisingly, the company didn’t manage to hold on to its share price gains – the ticker ended up falling all the way back down to $1.66 within the same session.

Securing said permit was certainly a step in the right direction for GBLX. However, this move can’t really undo the impact of the company’s lasting policy regarding GBLX‘s share structure. Which was worrying a few days ago, but now looks down right horrifying.

To elaborate – news of the permit wasn’t the only piece of information about the company to have an immediate and dramatic effect on GBLX‘s market value on June 9. An 8-K dated June 5 came out yesterday and informed investors that the company has issued 1.5 million shares of common stock to two undisclosed entities. Apparently, the shares were issued in exchange for the cancellation of debt amounting to $390 thousand – which means that said shares were issued at a price of $0.26 at a time when the company’s stock was being traded at $1.81.

Furthermore, the same 8-K announced that GBLX has sold 10 MILLION units to 57 undisclosed persons. Each of those units consists of one share of common stock and TWO warrants, and each of those warrants gives the holder the right to purchase one share of common stock of GBLX at a price was $0.50 per unit.

According to this latest 8-K, the issued and outstanding common shares of GBLX now total at 23,331,932. A terrifyingly high number, if it is to be compared to the one given in the company’s 10-Q for the period ended December 2013. Said report declared that as of February 14, 2014 the company had just 850,104 shares of common stock. That’s a 2744% dilution, over the span of little more than five months – almost all of it on toxic debt, converted into shares at prices five to ten times cheaper than the stock’s current price.

Investors are advised to take those facts into consideration as they make their minds up about jumping on the GBLX train.

Another marijuana company whose stock price tried to rise, but ultimately moved just 4.05% in the green despite favorable news, was Minerco Resources Inc. (OTCMKTS:MINE).