Eco Science Solutions Inc (OTCMKTS:ESSI) is a penny play that has maintained a vice-like grip on the consciousness of the OTC trading crowd since mid-August. The excitement comes largely as a consequence of a very aggressive promotional campaign by the Money Street powered allegedly by a “weekly advertising budget ranging from approximately $25,000 to $150,000 to cover the costs associated with creating, publishing and distribution of advertisements.”
The return on that investment has been an incredible launch of about 600% in ESSI share prices. We covered this stock a few weeks ago, concluding at the time that it was a great deal of icing with very little cake underneath. But we want to take another look under the hood here, particularly as they have some viable operations in the cannabis patch at a time of tremendous growth speculation for the space.
Eco Science Solutions Inc. (OTCMKTS:ESSI) is “a technology-focused company that provides solutions for the health and wellness industry. From enterprise software solutions, entertaining and useful content generation for mass distribution to consumer apps for daily use, the Company develops technical solutions that empower enthusiasts in their pursuit and enjoyment of building eco-friendly businesses and living healthy lifestyles.
Eco Science’s core services span business location, localized communications between consumers and business operators, social networking, educational content, e-commerce, and delivery.
The Company’s licensed e-commerce platform enables health-and-wellness enthusiasts to easily locate, access, and connect with health-and-wellness businesses and like-minded enthusiasts, and to facilitate the research of and purchasing of eco-friendly products … anytime, anywhere.”
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The hard facts here haven’t really improved a whole lot. This is still a company with a somewhat amorphous business model, just $837 in assets, no revenues and no likely revenues coming on the horizon in any manner, a ton of debt carried on the books, and a run rate of losses of nearly a million bucks per quarter. In addition, the stock just got smacked with the dreaded skull and crossbones on OTCmarkets.com.
So, what do they do, really?
We did a lot of digging on this one, and here’s what we found: In reality, the company has produced and “shipped” two apps: the Fitrix app and the Herbo app. It also advertises something called “Phion” on its web page. But with a little digging, we found that Phion is wholly owned as an LLC by a few folks in Arizona, and ESSI shareholders do not benefit from sales of Phion other than through branding association in a basic sense.
So, it’s really the apps that represent tangible value. Specifically, it’s the Herbo app.
As we noted in our last update, the Fitrix app isn’t a material factor. It’s an actual app. We downloaded it. It is not the result of a genuine effort to add value in the fitness space. For example, one of the main features is a button called “Goals”. If you tap it, you get a digital pad of paper onto which, presumably, you are to type in your goals.
But the Herbo app is of value. It’s a mapping app with every location selling anything that has anything to do with weed or paraphernalia or vaping or anything vaguely even tangential to the discerning stoner’s needs at a given time. It’s nicely color-coded and clearly useful.
In addition, the company has a version of the Herbo app called the Herbo Gift Card Wallet. It is not a crypto-currency exchange mechanism. It is simply a gift card wallet. You can make purchases with it in the same manner that you can make purchases with anything else.
It’s a little hard to find anything else associated with this business that offers any tangible clue to its ultimate value proposition to either consumers or shareholders. Certainly, vaguely worded overtures on the value of “naturopathic wellness solutions” aren’t going to mop up that quickly growing pile of debt.
As we noted last time, we believe this one is a concerning play, but if it does have something going for it, it’s this: ESSI has thousands of weed-related data points logged on its mapping service (“Herbo”) in the state of California, and Californians are just about to go to the ballot box in 4 weeks and probably vote to legalize recreational marijuana in the state.
At this time, carrying a capital value in the market of $48.6M, ESSI has virtually no cash on the books, which must be weighed relative to an appreciable load ($510.29k) of total accumulated debt. Furthermore, the name has benefitted from a jump in recent trading volume to the tune of above 320% beyond its prior sustained average level It pays to take note of this fact with the stock trading on a float that is very limited at just 9.37M shares. Prospective shorts are wise to respect the dynamic this may create — ramping trading activity can overwhelm available supply in a stock with this type of small float, leading to an upward burst in prices. For continuing coverage on $ESSI and our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!