Tranzbyte Corp. (OTCMKTS:ERBB) Sinks Deeper Post Quarterly
Foul winds have been sweeping the marijuana sector of the OTC lately. With companies chiming in with their reports, some of them also seemed to run into underwater reefs. Tranzbyte Corp. (OTCMKTS:ERBB) was among those, slipping about 25% since it published its last quarterly. On Friday ERBB sunk further, closing nearly 14% down on heavy volume.
ERBB‘s report came out on Wednesday and we took a long, detailed look at it in a previous article. The picture painted by the figures and info in the filing is far from a pretty one. The brief number takeaway is as follows:
- $30 thousand in cash
- $3.8 million in current liabilities
- $68 thousand in quarterly revenues
- $426 thousand in quarterly net loss
The company’s situation has not improved on a quarter-over-quarter basis. Quite the opposite – despite growing its previously reported $2 thousand in cash, ERBB‘s revenues shrunk by around 20% and net loss grew by roughly 30%. Long supporters of the company are still in the thrall of the pot craze, predicting share prices in the dollars, completely disregarding the fact that ERBB is neck-deep in toxic debt.
In our previous article we examined the problem more closely, but the short version of it is just as disconcerting. ERBB managed to issue 274 million shares to clear debt over the Jan-Mar quarter. The bad news for retail investors is that the conversion price those shares were issued at was $0.0005. Toxic financing continued in the quarter ended March, with a new $384 thousand in convertible debt, once again converting at a ridiculous discount, at around $0.0005.
With the recent SEC suspensions of five OTC companies that were supposedly working in the legal marijuana field, investor confidence in the sector is rather shaken. The last of those five was FusionPharm, Inc. (OTCMKTS:FSPM) who were suspended last Friday. Following that suspension, the SEC came out with an official alert aimed at advising traders to do their own research and watch out for unrealistically optimistic PR announcements. This is the third such warning, after the FINRA reiterated its warning in early 2014, once again focusing on the potential dangers of pot stocks.
We can only echo the sound advice the SEC provided and once again encourage readers to do their own research and use the company’s official filings for it instead of press releases.
