Borislav Tonev

Growblox Sciences Inc (OTCMKTS:GBLX) Goes Up on Insider Buying

by Borislav Tonev July 7, 2014
84GBLX.pngAfter a less than impressive performance during the last month or so, people seem to be finally getting back to Growblox Sciences Inc (OTCMKTS:GBLX, GBLX message board). In just three and a half hours on Thursday, investors traded more than $330 thousand worth of shares. The ticker opened the day at $1.22, it climbed up and briefly touched the $1.35 mark and then settled down. When the closing bell rang, GBLX was sitting at $1.33 which is exactly 11.76% above its previous value.

Not a bad performance considering the shortened session, but can the stock continue going up?

Some people reckon that it can. An entity called MJ Stock Report, for example, published a landing page and, as you can see for yourself, it is full of positive projections. That said, they did receive $150 thousand for spreading their optimism around and in Pennyland, that's a bit of an issue. It means that GBLX is the target of a paid pump (which, according to the disclaimer, will last for a few more weeks) and these campaigns rarely end well for the regular investor.

Nevertheless, some people still reckon that GBLX has what it takes to weather the promotional storm and come out on the other end unscathed. Having gone through the company's filings, we're not sure what those investors are so excited about.

Here's what GBLX had on March 31, for example:

  • cash: $339 thousand
  • total assets: $537 thousand
  • current liabilities: $1.5 million
  • NO revenues
  • yearly net loss: $655 thousand

The figures above are not exactly confidence-inspiring and things get even worse when you consider the recent financing deals that the company signed. This 8-K form, for example, will tell you that on June 5, GBLX converted $390 thousand worth of debt into 1.5 million shares of common stock. This means that the conversion rate stands at $0.26 per share. For the record, the ticker closed June 5's session at $1.60.

The same document also tells us that fifty-seven unnamed investors bought 10 million units at just $0.50 a piece. Each unit consists of one common share and not one, but two warrants which means that the potential dilution is huge.

Speaking of dilution, the O/S count grew from just 850 thousand on February 14 to more than 23 million on June 5. The constant stock issuance will inevitably put tremendous pressure on the ticker and there can be absolutely no guarantees that GBLX can withstand it.

All in all, there's no shortage of things that could scare away the regular investor. And yet, Thursday's jump shows that people don't seem all that bothered about the red flags. What's more, the run continues today. About thirty-five minutes into the session, GBLX is another 8% up while the dollar volume at the moment stands at nearly $140 thousand.

The reason for this is a certain Form 4 filed after the closing bell on July 2. It informs us that an entity called Lazarus Investment Partners LLLP has bought quite a lot of shares on the open market. The information was also presented to investors via a press release earlier today and the effects on the stock are easy to see.

Lazarus Investment Partners are quoted as Growblox's largest investors and many people reckon that their buying is a sign of something positive coming. Hopefully, this will turn out to be the case and GBLX will come up with an impressive piece of news that could give the stock a push.

CPXP.pngIt should be noted, however, that Lazarus don't always get it right. A couple of years ago, for example, they invested a fairly large amount of money in Coupon Express Inc (OTCMKTS:CPXP). As you can see from the Form 4 filing, the shares were bought at prices ranging from $0.0269 to $0.04. Right now, CPXP is traded at $0.0009 and is delinquent in its filings.

Apparently, Lazarus also saw a lot of potential in Teletouch Communications, Inc.(OTCMKTS:TLLEQ). In August 2012, they bought some shares at over $0.40 a piece. Unfortunately, things were going particularly well at TLLEQ's camp and a year later, they were forced to seek bankruptcy protection.

Comments 0

Type the characters that you see in the box (5 characters).