Growblox Sciences Inc (OTCMKTS:GBLX) is Feeling the Pressure

Earlier today Growblox Sciences Inc (OTCMKTS:GBLX) announced that they plan to capitalize on the relaxing marijuana laws in, of all places, Puerto Rico. How are they going to do it?

With the help of a $5 million private placement that they closed yesterday. In addition to these two announcements, GBLX also said that their growing chambers are already rolling off the production line and they moved their company headquarters from Florida to Nevada because, apparently, the Silver State is at the forefront of the battle to fully legalize medical cannabis.

To top it all off, GBLX entered the booming MMJ industry no more than two months ago and although the so-called green rush doesn’t seem to be as strong as it was back in February, plenty of people are still excited about the opportunities presented by the pot sector.

All in all, the prerequisites for a run in the right direction are there and yet, GBLX doesn’t seem to be particularly determined. Yesterday, the ticker opened the session at $2.70 (a 6.2% gap up) and stayed in the green for the better part of the day. At one point, it even hit a 52-week high of $3.49 and it looked like it was going to start the week on an extremely positive note. Unfortunately, about an hour before the closing bell, it crashed down and finished the day with a price of $2.29 (9% below Friday’s value) and a dollar volume of more than $3.3 million.

The question is: “Why is GBLX reluctant to move?“.

Let’s start with the press releases. The relocation of the company’s principal offices was definitely a good call since their previous headquarters appears to be a virtual office. We’re sure that the move to Nevada will somehow help the company with its business as well. The thing is, they moved the office and didn’t give us a new address. There’s no 8-K form reflecting the change and, as far as GBLX‘s website is concerned, the address is not that important.

We see pretty much the same thing with the announcement of the private placement. They did say that they raised $5 million through it, informed us that they sold common stock to some unnamed accredited and institutional investors, but failed to mention what the price of the shares was. Once again, no SEC filings confirm the transaction, but we should note that GBLX were kind enough to disclose the current number of issued and outstanding shares.

Apparently, the O/S count now stands at a little over 21 million which means that since May 5, it has grown by about 5 million. If these shares were all issued as part of yesterday’s private placement, then the aforementioned unnamed investors got them at a price of around $1 a piece (roughly a 56% discount compared to the current market price). Then again, because there are no filings describing the transaction, this is all guesswork.

We do know for a fact, however, that, as we mentioned yesterday, some debt was converted into common stock at rates ranging from $0.25 to $0.26 per share. We also know that not that long ago, investment units (which consist of common shares and warrants) were sold at $0.50 a pop.

All these things mean that an investment in GBLX should be preceded by a careful consideration of all the risks and a lot of research. Speaking of which, if you do some actual digging around, you’ll see that Craig Ellins, GBLX‘s current CEO, was once at the helm of a company called Phototron Holdings, Inc, otherwise known as Growlife Inc (OTCMKTS:PHOT). As you probably know, PHOT was considered to be one of the most solid enterprises in the marijuana industry… until the SEC came along and suspended the ticker due to, among other things, “potentially manipulative transactions in Growlife’s common stock“. PHOT is currently traded on the Gray Market and it’s hovering around 70% below its pre-suspension value.

Of course, PHOT wasn’t the only pot stock to get the axe. The SEC even issued a special message to investors warning them of potentially shady small cap enterprises that will try to lure them in with the help of the marijuana hype. This means that nobody, including GBLX, is safe.