Eco Science Solutions Inc (OTCMKTS:ESSI) is a penny stock we have covered on numerous occasions. Our view has generally been one of a short-term momentum bull based on the trading float and the backing of a concerted promotional campaign, but also a longer-term bear based the lack of any clear edge or path to true operational success.
In our last update, we made the switch from technical bull to technical bear, stating, “at this point, we feel the game may be up for this one”. The stock was trading at about $3.50 at that time. This week, we saw support truly break in the pattern that has defined the stock over the past 3 months, with a close well below the key $3.00 level, making for about 27% on the downside in the meantime. We will explore the process a bit deeper below. But first, for those not acquainted with this name, let’s take a broad look at the company.
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 company is run by a pair of brothers who live on Maui. One of them recently commented on affairs at ESSI:
“2017 is setting-up to be a solid year for Eco Science Solutions and its shareholders, as our targeted sectors in the health, wellness and alternative medicine industry are on the cusp of main-stream revolution,” stated Jeff Taylor, Chief Executive Officer of Eco Science Solutions, Inc. Mr. Taylor continued with, “We are pleased with the foundational work accomplished last year in both product research & development, as well as early releases of our technology platforms. We believe the financing secured will provide the working capital to fully execute to our business plan in 2017 and beyond.”
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.
Hence, it should be emphasized that this company doesn’t really have any products that seem to have a true route to monetization anytime soon. If you take the time to dig, you will find that the value here, in theory, is in its “Herbo” app. Herbo has the potential to become something important, but it would take a positive network effect process whereby local dispensaries and head shops aggregate onto the platform as users start to exponentially adopt it.
That said, under those circumstances, there may still be no barrier to entry for some competitive product. The point of the app is to locate dealers in places where pot is legal. Since there are more and more places where pot is legal, one might point out a potential growth curve.
But it needs to become dominant in the niche. That point has not happened.
But the Herbo app could conceivably be of value. It’s a mapping app for marijuana consumption. It’s nicely color-coded and clearly could be 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.
Currently trading at a market capitalization of $113.4M, ESSI has virtually no reported 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. As more color becomes clear on the name, we will review the situation and update our take. 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!