ERBB Analysis
Currently the cannabis industry is expanding in ways unimaginable barely a decade ago. For the first time in almost a century, the general public is now able to legally profit from the marijuana and hemp trade without fear of persecution. The ever changing legal status and public opinion regarding marijuana is making for exciting opportunities as the light now shines on this once black market.
One of those opportunities is Tranzybyte Corporation (ERBB). Like many penny stocks and marijuana related businesses, ERBB is a highly risky investment. However if you have access to disposable capital, ERBB could provide an incredible return on your investment. Before going on any further, I must disclose I currently hold a long position of 4.2 million shares, having originally purchased 5 million shares at .0014 and selling 800k shares a few weeks ago at .018, recouping my initial investment along with a healthy profit. Now that that is out of the way, here is my analysis of Tranzbyte.
Like most stocks on otc and pink sheet markets, ERBB is highly speculative and not entirely transparent, making a fundamental business analysis a little challenging. Yahoo Finance currently lists the outstanding shares at nearly 800 million. At the current share price ERBB commands roughly a market cap of roughly $5 million. That market cap is incredibly cheap and will be discussed below. Because the share float is so large, each .01 cent move is a gain of nearly $8 million in market cap. Such increases make it challenging for for the share price to climb drastically but at the current price, ERBB is highly undervalued.
Tranzybyte is one of the only publicly traded companies actually selling cannabis direct to consumers. The Company does so through 2 stores in Colorado under the Altitude Organic label. The Altitude Organic dispensaries provide high quality cannabis medications to residents of Colorado including traditional marijuana buds, edible and drinkable forms as well as many other cannabis products. Tranzbyte also has proprietary MRI technology through ProximaRF and radio frequency (RF) technology that they are working to incorporate into vending machines. The information regarding the vending machines is still very limited so further speculation or comparison to MedBox is not worthy at this time.
The direct sale of cannabis to consumers can be extremely lucrative. In California, some of the more successful dispensaries can draw over $1 million a month. Should Altitude Organic dispensaries command similar revenue, the Company would be making over $10 million per year at each location, totaling nearly $20 million a year or nearly 4 times the current market cap. Altitude Organix also has its own brand of edible cannabis treats which could be greatly expanded upon for larger distribution.
The current pending recreational legality of marijuana in Colorado would provide a major boom for cannabis retailers in the state. "Pot tourism" could potentially make Colorado the Napa Valley of marijuana, bringing enthusiasts from all over the world to sample goods. Tranzbyte is also expanding into Washington state, as the state has approved similar recreational use of cannabis. Additionally, as the public perception continues to ease regarding marijuana use, the US Attorney General Eric Holder is forced to confront the federal stance on marijuana prohibition and all signs point to an ease in policy.
The medicinal use of marijuana is also a potentially explosive market and research is being conducted as to the effects on ailments ranging from cancer cell reduction to pain management to epilepsy to autism to depression to so many other applications. There are untold billions of dollars in each application and testing has been extremely positive for several conditions. As it stands right now the DEA considers marijuana a Schedule 1 narcotic, on par with heroin, claiming there is no medical value for cannabis. Ironically, of all drugs on Shedules 1 through 5, marijuana is the only one with absolutely no credible evidence of fatal side effects.
After all that, my current projections for ERBB put it in a range between .10 to .20pps, giving it a market cap of roughly $80-160 million. This is based on potential annual sales via Altitude Organic dispensaries, expecting as much as $10 million annual revenue for both locations. Obviously the share price could explode to .25 to .75pps or beyond if the RFID and vending machine initiatives take hold. Needless to say, if you have a few thousand dollars to risk and a strong investment ethic, ERBB could provide substantial returns.
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