Todor Pichurov

American Green Inc (OTCMKTS:ERBB) Logs Volume Spike

by Todor Pichurov March 30, 2016

In yesterday's session American Green Inc (OTCMKTS:ERBB, ERBB message board) managed to land a spot among the most heavily traded pot stocks and OTC stocks overall. The reason for this accumulation of volume seems to be yet another press release that went up yesterday. Despite the significant share and dollar volume generated, ERBB closed flat.

The company announced having financed “a significant expansion project” for Herbal Elements – the entity that manufactures American Green-branded products. In essence, the project involved building a second deck for cultivating leaf over the existing one in the flower rooms used by Herbal Elements. The press release is full of wonderfully sounding generalities and concludes with a much more specific forecast.

By the last quarter of 2016 ERBB expects cash-flow positive operations that would be sufficient to “pay down debt” and cover monthly operational costs. Bold words, especially for a company that has failed to deliver on its promises and forecasts for years under previous helmsman Stephen Shearin, and for a company that had the following on its balance sheet as of December 2015:

  • $4 thousand in cash
  • $7.9 million in current liabilities
  • $108 thousand in quarterly revenues
  • $732 thousand in quarterly net loss

The chief issue with ERBB, barring the colossal failure that the ZaZZZ machine turned out to be, is the way the company secures its financing. The company is still pumping out new convertible notes that can be turned into common stock at a 50% discount from the lowest closing bid price, going 12 months back from the day of conversion.

Within the space of its last reported quarter ERBB managed to issue another $370 thousand worth of fresh convertibles, all converting at the same hefty 50% discount from lowest closing bid 12 months before the conversion event. Understanding this sort of financing can really help with understanding why ERBB last reported 5.5 billion outstanding shares.

Comments 0

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