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Saturday, January 23, 2021

Ups and Downs for Growblox Sciences Inc (OTCMKTS:GBLX)

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Growblox Sciences Inc (OTCMKTS:GBLX) is a micro-cap stock that has started to engage some focus among traders and investors as prices pull back following a revealing 10-Q. At issue is the company’s failure to line up sales despite its stated goal of having begun large top line growth by early next year.

Recent action has seen about -20% driven out of share pricing during the trailing month. However, traders may want to keep this stock on the radar. GBLX has evidenced sudden upward volatility on many prior occasions. In addition, the name has witnessed a pop in interest, as transaction volume levels have recently pushed above 460% over what the stock has registered over the longer term.

Growblox Sciences Inc (OTCMKTS:GBLX) is a Las Vegas-based firm that frames itself as a company that focuses on the research and development of medical cannabis drugs and treatments.

The company claims to produce measurable medical-grade cannabis, cannabis concentrates, and cannabinoid therapies through using various technologies in plant biology, cultivation, and extraction techniques combined with biotechnology. However, with no indications of sales in the recent past or near future, this seems more likely a theoretical statement.

It also claims to be involved in the development of controlled-climate indoor agricultural technology growing and cultivation suites, including TissueBLOX, GrowBLOX, CureBLOX, and ExtractionLAB.

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At this point, the company notes that it plans to “cultivate cannabis using innovative, but conventional methods in its wholly owned subsidiary, GB Sciences Nevada, LLC (“GBSN”). GBSN is in the final stages of opening Phase 1 of an approximately 28,000 sq. ft. facility in Las Vegas, Nevada.  When all phases of construction are completed, the facility is expected to produce 6,800 pounds of marijuana per year and generate revenues of $16.9 million, based on a projected wholesale price of $2,500 per pound. Completion of all Phases of this facility is dependent upon the availability of capital to complete construction. Growblox Sciences has made completion of all Phases of this facility its number one priority.”

The question here is really about timing. As noted in the company’s recent 10-Q, they acquired a 60% interest in a Nevada Medical Marijuana Production License with an option of up to 80%.

That establishes a license for producing, which is a huge asset and puts this operation on better footing.

As the company points out, “A production license enables us to convert cannabis plants into to oils and extracts that are suitable for creating medical compounds as well as consumer products. This license is critical and essential to our plan of producing cannabis-based medicines, and must be integrated into our cultivation facility to ensure quality control standards and efficiency in our production of cannabis medicines. The Company’s plan commence operations on or about October 1, 2016 has been pushed back to no later than January 2017. These discussed strategic modifications in our plan along with the acquisition of this production license contributed to the January 2017 date.”

The sales goals here are the question. The company has effectively “guided” its fiscal year 2017 (which ends at the end of calendar Q1, on March 31, 2017) top line numbers to about $700K in sales based on a concurrent opening of both the cultivation and production facilities.

This seems like a bit of a stretch. They fill in the gap by saying, “the Company will be able to acquire cannabis from other producers and process and sell products such as vape pens and edibles immediately.”

It’s important to remember that, as of yet, the company has not made a dollar.

Earning a current market cap value of $29.4M, GBLX has a decent store ($178.32k) of cash on the books, alongside total assets a bit less than $3.6M, which compares with an appreciable load ($2.52M) of total accumulated debt. We are currently going through the process of appraising the cannabis patch and separating the top shelf plays from the crowd following the landmark vote on November 8. The jury is still out on Growblox Sciences. We will continue our research and update the story again very soon. For continuing coverage on shares of $GBLX 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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