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Sunday, October 25, 2020

Micro-Cap Spotlight on Eco Science Solutions Inc (OTCMKTS:ESSI)

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Eco Science Solutions Inc (OTCMKTS:ESSI) is a micro-cap broadly and apparently in the cannabis patch by association. ESSI stock had started to pop with the group but has since found a much tougher time garnering attention in recent weeks.

This is one on which we have explicitly taken a cautious stance. One of the main reasons is 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.” When you have that kind of sponsorship and an enormous amount of sector tailwind, you can explain away a lot of market action as something other than insiders clamoring for equity exposure.

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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As we have been covering, the cannabis space, itself, is in a period likely to be defining in terms of expansion in the legal sales footprint due to major legislative changes. In that vein, anything and everything associated with marijuana and cannabis has been skyrocketing up the charts as poll after poll seems to be confirming the idea that most Americans seem to think pot should be broadly legal.

However, Eco Science isn’t benefitting quite so much. ESSI stock is actually down over the past month, and sideways since the conclusion of the big promotional campaign in August. One reason is because of some of the issues we brought up last time. For example, the company has a somewhat amorphous business model, just $3k in total 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? 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. And the Fitrix app is not a genuine product with a viable path to any end market. Download it and see for yourself.

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.

Currently trading at a market capitalization of $34.3M, ESSI has minimal cash on the books, which is balanced by an appreciable load ($510.29k) of total accumulated debt. Overall liabilities are high and there is little to protect against competitive intrusion by Weedmaps or others into its primary focal niche, making this a more difficult path than some of the other plays in the space we have been focused on. But it may still turn out to be a very interesting story to follow. For continuing coverage on ESSI stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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