Growblox Sciences Inc. (OTCMKTS:GBLX) Continues Its Crash Despite Media Attention
Growblox Sciences Inc. (OTCMKTS:GBLX) crashed another 14.62% yesterday, despite the publishing of yet another optimistic piece of PR, that reassured investors that the company is on the verge of a breakout.
It is well known that in the present volatile state of the marijuana stock market, PR and media attention can easily fling a ticker sky-high for a short time, but unless the news is based on actual reslt, the climb is likely to be short lived. Moreover, once a ticker starts falling, it usually takes time before this tactic can be used again effectively. Releases issued at a time when investors are recoiling from the stock have been known to have little promotional value – but this didn’t stop GBLX from trying.
True to the spirit of the marijuana hype, once things started getting stale, GBLX made an attempt to compensate for its shortcomings through PR. The “Shareholder Update” the company issued was as optimistic, vague and uninformative as can be expected by a hollow marijuana press release, profusely wordy and cluttered with clichés such as “cutting edge technologies” and “perfected our technology”.
Still, the press release did give investors something to grasp at. The company’s announcement GBLX that it has “raised $5 million from accredited and institutional investors through common stock and warrants” is certainly noteworthy. At first glance this appears to be excellent news – the company got its hands on some cash, which is always good. However, investors are advised to note that 3 million shares of common stock were issued to Lazarus Management Company LLC as compensation. That’s a dilution of approximately 25% on this occasion alone!
Another thing that investors should probably consider are the warrants that the company has issued. In light of GBLX‘s fondness of toxic funding, news of the issuance of said warrants sticks out like a sore thumb.
GBLX‘s tendency towards toxic funding is truly remarkable. On March 21, GBLX sold 200 thousand investment units to an unknown investor at a price of half a dollar per unit. Each one of those units contains one share of the company’s common stock and two warrants, exercisable at a rate that the company has failed to disclose. But the story doesn’t end there. $114 thousand worth of debt have been converted into 438 thousand shares merely days after said issuance, followed by the conversion of another $459 thousand worth of notes into 1.7 million shares. The two later conversions were both done at rates of about $0.25 per share, which roughly puts the discount rates on all the conversions between 60% and 90%.
No amount of publicity can compensate for funding this toxic. Add the fact that GBLX was recently targeted by a paid pump campaign and it becomes obvious why the ticker is currently falling as hard as it is.
Another marijuana company that fell yesterday is Terra Tech Corp. (OTCMKTS:TRTC), who lost 8.7% of its market cap in that session.