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Wednesday, October 21, 2020

Eco Science Solutions Inc (OTCMKTS:ESSI) Springs Higher on Debt Deal

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Eco Science Solutions Inc (OTCMKTS:ESSI) is a momentum name in the cannabis space that has started to accelerate higher as the company feeds off prior negativity wrapped into one of the smallest trading floats in the cannabis patch. The company’s key killer app core focus is its Herbo app, which is evolving into an “Uber” of pot delivery and commerce, or at least it would appear this is the narrative surrounding the stock at present.

In addition, the financial situation for this company has always been the big drag: prior technology releases carried no potential for monetization, and debt grew at an extreme pace. That’s generally a bad combination. The company was put in the spotlight by the Money Street as a major promotion last year. But debt issues have weighed on its potential. However, just this past week, the company put out an 8K maintaining that a key liability would fall off the books at terms seemingly far less dilutive than feared. The result appears to be a major squeeze higher in shares.

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 noted above, the action here has been particularly strong. In all, we’ve witnessed 220% tacked on to share pricing for the name in the past month. The situation may be worth watching. ESSI has evidenced sudden upward volatility on many prior occasions. In addition, the name has seen an influx in interest of late, with the stock’s recent average trading volume running 92% over the long run average.

Traders should note this as important with the stock trading on a float that is tiny at just 5M shares. This type of thing is something to watch out for: ramping trading activity can overwhelm available supply in a stock with this type of small float, leading to an upward burst in prices. Since we last covered the name, the stock has moved 108.6%.

Our sense is this small float and strong action are highly entangled phenomenon. If you consider the recreational legalization of pot in California in November, and the fact that this company had been piling up enormous liabilities on the balance sheet earlier last year, the 8K out this past week may have set off a massive short squeeze, augmented by just such a scramble for scarce shares to cover.

According to the 8K, on January 10, 2017, the Company entered into a Cancellation and Release Agreement with Separation Degrees – One, Inc. wherein the Company owed a total amount of $1,920,424, to SDOI in unpaid fees under the Technology Licensing and Marketing Agreement, which the Company entered into with SDOI on January 1, 2016.  The total amount of unpaid fees could be paid with common shares, and pursuant to the terms of the Agreement, the amount of shares that would equal the amount of the unpaid fees would be 16,745,247 Shares of Common Stock.

The Cancellation and Release Agreement entered into with SDOI allowed for the cancellation of the unpaid fees in exchange for 4,000,000 Shares of the Company’s Common Stock.  The Board of Directors, on January 10, 2017, resolved to execute the Agreements and instructed the Transfer Agent to issue the 4,000,000 to SDOI or its Designee.  No further obligations, one to the other is contemplated.

At this time, carrying a capital value in the market of $150.2M, Eco Science Solutions has virtually no cash on the books, which is balanced by about $662K in total current liabilities. One should also note that debt has been growing over recent quarters. The company is pre-revenue at this point. You can bet we will update this one again as new information comes into view. For continuing coverage on shares of $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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