Tranzbyte Corp. (PINK:ERBB) Friday Pump by Stock Mister Deflates
Yesterday Tranzbyte Corp. (PINK:ERBB) closed down over 16%, settling at $0.0031 at the bell. The Friday pump of the stock run by promoter Stock Mister had the usual effect on the stock – a brief spike and then a drop below pre-pump values.
Yesterday as many as 44.8 million ERBB shares changed hands, a smaller volume compared to the previous two sessions, but the stock still slipped and closed down. ERBB claim that their mission is to attract small private businesses and provide them with capital by using the fact that it’s publicly traded. Tranzbyte refers to this practice as ‘dividend farming’, as when a held company decides to public on its own, it should pay dividend to ERBB and its stockholders.
This sounds like a mission both noble and profitable. It doesn’t look like ERBB has ‘farmed’ a lot, though. The company uses the alternative reporting standard, being a pink sheet. Their latest quarterly report is dated September 30, 2012 and contains some figures that can deflate enthusiasm:
- $1,761 in cash
- $3.7 million in current liabilities
- zero quarterly revenue
- $210 thousand in quarterly net loss
ERBB is neck-deep in debt, losses are stacking up in the hundreds of thousands, and the company has less than $2 thousand in cash to its name. The company has issued some horribly toxic convertible notes as well. In the end of June 2012 ERBB issued a convertible to a former president of the company in the amount of $500 thousand. The conversion rate for the note is set at a discount of 50% of the lowest closing price over 360 trading days prior to the conversion date. The restriction that upon conversion the noteholder cannot own more than 9.9% of ERBB stock is not much of a consolation, considering the company had over 1.8 BILLION shares outstanding as of January 2013.
Previous picks of Stock Mister have been far from a roaring success as well. On Jan. 15 Stock Mister promoted Ghana Gold Corp. (PINK:GGCO). The stock went down in leaps and bounds after the pump and is now sitting at a disappointing $0.04 per share.
Traders would do well to be extra careful with promoted stocks, especially if they are sub-pennies that look so cheap and easy to get into. Do your own research and stay safe!
