Tranzbyte Corp. (OTCMKTS:ERBB) Surges on More PR Fluff

The PR concerning the company’s ZaZZZ pot vending machine is worded in a somewhat convoluted manner. The release explains that ERBB has begun to ship “the first of many machines” across the U.S. last week. This basically says they began shipping one item, with more to follow at some point in time.

The news would have been infinitely more exciting if the recent events the company had planned and announced a month ago did not fall through. On May 21 ERBB announced a ‘coordinated media event’ in the form of a live stream that should have taken place on June 12 and shown several ZaZZZ machines up and running in several states. Sadly, the event simply did not take place, even though shareholders waited with baited breath for several weeks. The reason for the missed event – ‘technology got in the way’, according to COO Stephen Shearin.

To make up for the disappointment, ERBB put up a video of a ZaZZZ machine on the factory floor on the day scheduled for the livestream. Now they have two more recent videos published on the company’s new YouTube channel that show how the ZaZZZ operates and does not dispense product if the card inserted does not belong to the person inserting it.

At the ZaZZZ unveiling, ERBB‘s COO Mr. Shearin said that ‘multiple cameras’ will allow the use of ‘some advanced biometrics’ to match the card inserted with the person in front of the machine. None of this is shown in the video. The footage simply shows a guy inserting a driver’s license that is not his own and the machine refusing to dispense. As one commenter below the video stated, it would be reassuring to see the actual owner of the card use it immediately afterward, with the machine accepting the card this time around. On the company’s Instagram page there is a photo of the machine installed on location at Herbal Elements, Colorado but unless they’re very well hidden, there are no visible cameras near the machine. A separate video shows the machine actually dispensing a product after a cash payment is made. The ZaZZZ only accepts cash in its current iteration.

Even if traders choose to look past the hyped-up PR and videos that aim to dispel any doubts but fall a tad short of their mark, there’s also the situation with ERBB‘s share structure, debt and clearing thereof. The company is literally swimming in toxic debt. In Q1 of 2014 ERBB cleared $150 thousand of debt, converting it into shares priced at $0.0005 each. Even at the current market prices, this is a 98% discount. The accumulation of toxic convertibles continued in the last quarter, with a new $384 thousand in debt, once again converting at a 50% discount from the lowest closing bid price 18 months prior to conversion. This means that for a good while longer those $384 thousand will be convertible at around $0.0005 per share. It’s difficult to imagine how a company seeks to incite faith in its current standing and valuation, when the company itself keeps dishing out new convertibles that can be turned into shares at ludicrous discounts from the market price.

ERBB‘s fiscal year ends June 30, so it will be a long while before investors see another financial report from the company. The earliest one that could potentially contain ZaZZZ lease revenues is due in mid-November. Until then, traders are advised to exercise caution and do their own research.