In an unprecedented move American Green (OTCPINK:ERBB) announced on August 3, it had successfully purchased the small California town of Nipton, which plans to transform into a production “hub.”
As part of their first efforts, once they begin production in the town, American Green plans to focus on the “bottling if fresh-CBD infused water” that the company plans to distribute in the state of California.
“This acquisition allows us to channel the myriad interests in cannabis production and consumption for an immediate positive impact to this community’s members and to cannabis consumers across the country,” chairman and president of American Green, David Gwyther said in a press release.
American Green seeks to revitalize the small town into “an effective hub for the production of various cannabis-based products” with the possibility of a fully-licensed cultivation including consumption. The company also hopes to add various commercial and recreational attractions like CBD and mineral baths and cannabis-product retail outposts.
The price wasn’t disclosed, however, current owner Roxanne Lang said was listed at $5 million when it was put up for sale last year.
Alan Brochstein, a cannabis financial analyst with 420 Investor, wrote it was unclear how this company was actually affording this purchase since his review of American Green’s financial results, showed “a company in distress.”
As part of the company’s financial disclosure for the third quarter of 2017, American green revealed their current cash flow held $191,287. The company is also facing liabilities of over $8.5 million.
“American Green, with a market cap of $22mm but no net assets and regular operating losses, is on a serial dilution treadmill from which it is unlikely to escape anytime soon, even before taking on the additional expenses required for the Nipton project,” Brochstein wrote.
The past five trading days for American Green have been tumultuous as it saw a massive 109.09 percent increase overall, leading it to a year-high of $0.004. However, on Tuesday the company saw a 37.84 percent drop off, which put their stock back down priced at $0.002. As of market closure on August 8, over a year-to-date basis, ERBB has seen a 0 percent increase.
“American Green has been an incredible disappointment for investors since inception, as the company has failed to produce material revenue but has dramatically increased its share-count due to the issuance of stock to holders of its convertible debt,” Brochstein added.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.