[[tagnumber 0]][[tagnumber 1]]mCig, Inc. (OTCMKTS:MCIG) has been sliding down the charts since the beginning of the month after it spiked in the end of September. By mid-October the ticker had lost quite a lot of value and had reached a 52 week low of $0.20 per share.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]Since then, however, the hype surrounding the medical marijuana industry has also had an impact on [[tagnumber 6]]MCIG[[tagnumber 7]], as the ticker recorded 3 sessions in the green that were accompanies by increased investor attention.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]Still, compared to other players in the MJ industry [[tagnumber 6]]MCIG [[tagnumber 7]]doesn’t have that strong balance sheet. Here is what the company recorded in the second quarter of the year.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 17]] [[tagnumber 18]]cash: $225 thousand[[tagnumber 19]] [[tagnumber 18]]current assets: $2.16 million[[tagnumber 19]] [[tagnumber 18]]total assets: $2.8 million[[tagnumber 19]] [[tagnumber 18]]current liabilities: $7 thousand[[tagnumber 19]] [[tagnumber 18]]quarterly revenues: $195 thousand[[tagnumber 19]] [[tagnumber 18]]quarterly net loss: $1 million[[tagnumber 19]] [[tagnumber 30]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]And although the company doesn’t have that much of an impressive cash position to boast a $71 million market cap we can’t go by without saying that it is a rare example of an OTC company with virtually non-existent liabilities. It is good to note that the share structure has also been kept tight with the help of [[tagnumber 6]]MCIG’s[[tagnumber 7]] CEO, who retired the same amount of his own shares that had to be issued to other parties.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]On Tuesday MCIG announced a strategic distribution agreement with [[tagnumber 6]]Omnicam [[tagnumber 7]]and their Korean partners from [[tagnumber 6]]Kooleever, Inc.[[tagnumber 7]] and it was felt in the charts. Despite the small percentile movement of 5.22% we saw increased attention as more than 4.52 million shares changed their owners and generated $1.1 million in dollar volume, while [[tagnumber 6]]MCIG [[tagnumber 7]]went on to a close at $0.242.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]The hype quickly disappeared though, and yesterday’s session was quiet, while [[tagnumber 6]]MCIG[[tagnumber 7]] lost 0.83% of its value. Today’s session started off rather well without the help of any news and by the writing of this article [[tagnumber 6]]MCIG [[tagnumber 7]]is 5.42% up the charts.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]In any case, it is always a good thing to do your due diligence and weigh out the risks before making an investment decision.[[tagnumber 2]]
It seems the tables may have turned for Sanomedics International Holdings, Inc. (OTCMKTS:SIMH). Following the spectacular trip the share price took from one cent per share to an intra-day high of $0.60, SIMH has fallen into a pattern of a big red dip, followed by a minor bounce, then another big red session. Yesterday the ticker dropped 18% to a close of $0.05 per share, on slightly faded volume of 12 million shares traded.
We have been covering the company since it first shot to the top of the biggest OTC daily movers. SIMH is the maker of the Caregiver contact-free thermometer. After the CDC in Atlanta ordered just under 100 units of the thermoteter, SIMH ripped up the charts. However, the percentile increase in share price of over 2000% within two sessions proved unsustainable and the price started tumbling back down.
There could be further correction, given the new information that traders now have. The company’s last reported issued and outstanding share number at the time of the October 10 price surge was 18 million common shares. As we previously wrote, it was highly unlikely that this number was current, considering SIMH traded 31 million shares on Oct 15.
The company’s latest filing from Tuesday contains a more current outstanding shares figure – 33.8 million common shares as of October 13. This means that SIMH diluted its common stock by about 90% within two months.
Additionally, the company’s Twitter account is still used to disseminate misinformation and statements that are simply not true. A new tweet made yesterday states that “There is only ONE Clinical Grade Non Contact Thermometer”, and it is the company’s Caregiver. This statement is in sharp contrast with the existence of clinical infrared contact-free thermometers produced by companies such as VeraTemp, TempIR and Santa Medical.
Back in May the stock of Eco-Shift Power Corp (OTCMKTS:ECOP) broke through 90 cents per share. Unfortunately the main reason for the impressive climb up the chart was a wide spread pump that even featured a hard mailer brochure. The artificial hype quickly dissipated and the stock suffered a series of devastating crashes that brought it back down to a low of 25 cents posted in July.
Since then for the most part ECOP has been unable to recover its losses fluctuating between 20 cents and 35 cents. Investors have been reluctant to put their trust into the stock and even the announcements about different lighting retrofit contracts failed to generate any excitement. In fact less than two weeks ago the company registered sessions with less than 10 thousand traded shares.
Yesterday ECOP issued another PR and this time though the market paid attention. During the trading hours the record number of 1.7 million shares changed hands surpassing the average volume for the company by more than 17 times. The news that caused all the commotion was the acquisition of Sun & Sun Industries Inc. The deal was first announced at the end of September but it was officially completed on October 20.
Despite the significant announcement and the record volume the performance of the stock wasn’t that impressive. ECOP surged to a high of $0.38 in the minutes after the opening bell but quickly took a step down and remained relatively flat for the rest of the session closing with a gain of 9.38% at $0.35. One possible explanation for the subdued climb may be the fact that once again ECOP has been targeted by paid pumpers.
The email alerts began flying around shortly after yesterday’s trading began. The first pumpers to start touting the company were IPO Society and SIRI.BIZ both disclosing a $50 thousand compensation for their services. In the evening a lot more newsletter joined the campaign – Stock Publisher, Penny Stock Crew, Stock Freak, for a $10 thousand compensation. The efforts to create as much artificial hype as possible are continuing today and even another outfit became involved – 1-2-3 Stock Alerts who bagged $30 thousand. It seems that there are still some people who are willing to pay quite a bit for the continued promotion of the company.
But the red flags don’t stop with the pumps. ECOP’s financial report for the quarter ending June 30 contained the following numbers:
• $39 thousand cash
• $992 thousand total current assets
• $2.1 million total current liabilities
• $46 760 revenues
• $1.7 million net loss
With limited cash reserves the company has been forced to look for external sources of finances. As a result two convertible notes totaling $200 thousand were issued to JSJ Investments. The notes can be converted into common shares at a 50% discount to the average three lowest trades for the ten trading days before conversion. In July ECOP issued another $365 thousand worth of convertible notes with a conversion price of $0.15, more than 50% lower than yesterday’s close.
With all the red flags around the company it may be for the best to use caution. Do your own due diligence and adjust your investment accordingly.
After obliterating nearly 11% of its market price on Tuesday, yesterday MyEcheck Inc (OTCMKTS:MYEC) lost another 2.62% 8.3 million shares, and the stock is currently at $0.0335.
MYEC hasn’t issued any new press releases since last Friday, when it announced an agreement with Dad’s Roast Custom Coffee. The agreement with the “national coffee vendor” managed to provide MYEC with two positive sessions in a row, but now that the hype from the PR is wearing off, the stock is descending.
The same thing happened with MYEC‘s previous PR. It was issued on Oct 13 and disclosed that the company has filed a lawsuit against an entity Zipmark, Inc., and a man by the name of Jay Bhattacharya. The lawsuit was for damages and injunctions for “Breach of Contract and Patent Infringement” and it got MYEC three consecutive green closes.
An issue concerning MYEC, which we have already discussed in our previous articles is that the company tends to make promises it fails to keep.
One such promise has to do with MYEC‘s MJ – Pay App launch. The Disclosure Statement of the company’s latest quarterly stated that the app was available on Android Play and iTunes, since its launch in “mid-2014”. This was announced on Aug 14 – the file date of the report, and turned out to be a lie, as the app didn’t launch at all. Later on, on Sept 22, MYEC explained that due to “a service partner delay” the launch will be delayed and will occur in “January 2015”. Time will tell if the company will actually keep this promise.
Another announcement that MYEC failed to go through with is becoming SEC reporting. A PR from Aug 13 stated that MYEC is planning to file the necessary Form 10, which will turn MYEC from Alternative reporting to SEC reporting company. Then another one from Oct 1 restated their intentions, and yet there is still no Form 10.
It is always best to avoid making decisions based on hype. Do your own research and take into account all the risks associated with the company before putting any money on the line.
A couple of months ago, IFAN Financial Inc (OTCBB:IFAN) went through some changes. There was a reverse merger, the name was changed, and there was a 140 for 1 stock split. The company ditched the idea of producing a clothing line for children made entirely of organic materials and said that instead, it’s going to produce devices that will enable convenient, affordable, and, most importantly, safe electronic transactions.
Spending money through your mobile phone is not something our society is completely used to at the moment which means that if IFAN want to draw a large number of customers, they’ll need to prove to everybody that they are a credible company. Unfortunately, they might have some problems with this.
Let’s start with the address of their corporate headquarters. Basically, it’s a UPS store. It’s hardly the most confidence inspiring location for the principal offices of a publicly traded company whose market cap stands at around $44 million.
Then we come to the people running the whole show. IFAN‘s CEO, J. Christopher Mizer was once at the helm of Bio Matrix Scientific Group Inc (OTCMKTS:BMSN). While he was there, his company went through more than a few paid pumps. Numerous promotional outfits have tried to convince investors that the ticker is going to make them very rich, but the truth is that right now, BMSN is nothing more than a heavily diluted double-zero stock that has a rather appalling 10-Q.
Speaking of 10-Q’s, the figures presented by BMSN are pretty horrific, but they’re still more solid than what IFAN has to show us. Here’s what Mobicash America Inc (IFAN‘s subsidiary dealing with the secure online transactions) had on August 31:
- cash: $4,691
- total assets: $14,215
- total liabilities: $3,114
- NO revenue since inception
- quarterly net loss: $444,744
All in all, based on the facts and figures above, IFAN doesn’t look like the most appealing investment opportunity on the OTC Markets. Yet, people simply don’t care.
Out of the last ten sessions, only one ended in the red and the cumulative gains over that period amount to no less than 77%. During yesterday’s session alone, IFAN managed to add a respectable 22% which means that it’s currently sitting at $0.55 per share. The volumes are also picking up which is somewhat strange considering the fact that the company hasn’t made any announcements since the reverse merger.
Once you do some digging around, however, you’ll see that there’s a logical explanation for the increased interest in the stock – it’s being pumped for $3.5 million. A link to a landing page has been flying around for the past few days and a paper mailer copy of it is also popping up in people’s mailboxes.
The hype and excitement is certainly supporting IFAN at the moment, but before you jump in, you have to ask yourself: “Does the stock have what it takes to sustain the current levels?”.
You need to get to the answer on your own, but while you’re doing it, you must bear in mind that, as we mentioned yesterday, a couple of years ago, some unnamed investors bought a total of 29,600,000 shares of IFAN common stock for $5,350.
When the rest of the marijuana sector jumped yesterday, GreenGro Technologies, Inc. (OTCMKTS:GRNH) wasn’t left behind. Company share prices rose 53.41% in that session alone, with nearly 9 million shares changing hands.
As can clearly be seen, GRNH was already on its way up when the most recent news hit the web. Much like many companies in the branch until that point, GRNH stock prices had had a couple of impressive jumps on the rumors that President Obama is to nominate known marijuana legalization proponent Vanita Gupta for Assistant Attorney General.
That is why when CNN Money covered a couple of MJ stocks and the statements made on the Gubernatorial Candidate Forum of Arizona became public knowledge, the market exploded with activity and volatility launched the whole branch, including GRNH, sky-high.
Naturally, many other companies, such as Hemp Inc. (OTCMKTS:HEMP) and American Green Inc. (OTCMKTS:ERBB) also registered massive price gains, giving investors high hopes that the most volatile days of the marijuana rush are now back.
Still, as good as that may sound to opportunistic traders, it would probably be prudent for dedicated investors to remember that marijuana penny stocks carry in them the potential for great loss as much as for huge profit. After all, just like last time, these tickers are now soaring on hype and hope and not much else – and we all saw what happens when the hype dies or traders start taking profits.
As usual, due diligence should not be skipped, and this is especially true as in GRNH‘s case, because even a little bit of research on this particular company can reveal some pretty off-putting things. Suffice it to say that the company’s latest financial report was far from rosy. One glance at it makes it clear that the company’s financial foundation is shaky at best, and there are plenty of evidence of toxic dilution.
Yesterday virtually the entire pot sector of the OTC was swept by a tidal wave of enthusiasm. Share volumes were through the roof and share prices followed suit for most of the popular names in the sector. American Green, Inc. (OTCMKTS:ERBB) was no exception. The company closed 26% up on 103 million shares traded – its biggest volume for nearly two months back.
The reason for ERBB‘s climb is not directly related to the company and its activity. There were no new filings or press announcements coming from ERBB yesterday. The company’s share price simply hitched a ride on the new wave of giddy excitement that is sweeping pot investors. A number of factors came together to trigger this cross-sector swell.
One of the biggest factors is probably the appointment of Vanita Gupta as acting head of the civil rights division of the DoJ. Gupta is presented as an outspoken defendant of legalization across the board by various media. Additonally, the November vote for legalization in three states is drawing nearer. The ballot will be held on Nov 4, not two weeks from today and will determine whether Alaska, Oregon and DC will be following in the footsteps of Colorado and Washington.
A featured video piece on Yahoo Finance focused on another marijuana company that has been around for a long while – Medical Marijuana, Inc. (OTCMKTS:MJNA). This sort of exposure for virtually any of the popular OTC pot stocks creates momentum for the whole sector.
How long this new sector-wide rally will continue remains to be seen. With some stocks putting on as much as 50% or even 160% in a single session, long investors should be on the lookout for profit takers and sudden reversals following climbs that are difficult to sustain.
Hemp Inc. (OTCMKTS:HEMP) stock prices shot 60.56% up yesterday, as media coverage of political developments sparked another marijuana rush.
As the charts indicate, HEMP was already on its way up when the news hit the wire. The company’s market value had been moving in leaps and bounds for a few sessions on the rumors that President Obama is about to nominate known marijuana legalization proponent Vanita Gupta for Assistant Attorney General. Still, the increased interest and activity the ticker registered then is nothing compared to yesterday’s outburst.
Said explosion of buying was caused by the combination of a fair number of factors. With all the rumors circulating around, many opportunistic traders were actively monitoring the marijuana market and looking for the best moment to jump on the MJ train again. That is why when CNN Money’s coverage and the statements issued at the Gubernatorial Candidate Forum of Arizona hit the web, the market exploded.
The combination of both news certainly proved volatile, launching HEMP all the way to the top of the charts and helping other companies such as American Green Inc. (OTCMKTS:ERBB) and GreenGro Technologies, Inc. (OTCMKTS:GRNH) make massive price gains as well.
Still, in spite of this most favorable development, investors would do well to remember that all these jumps, without exception, are purely hype driven.
Marijuana penny stocks carry in them the potential for peril as much as for profit, and investors should bear in mind the risks that a hyped-up market’s volatility brings. It wasn’t all that long ago when we saw first hand what happens when the hype surrounding a company subsides, or investors start taking profits.
As the saying goes – what goes up must come down, and since most of the companies in the legal marijuana branch traditionally don’t have anything that could keep them afloat aside from hype, the fall seems inevitable. Not only that – it would probably happen sooner than many hyped-up investors think. Why?
Because the jumps we’re now seeing on the charts of the above mentioned companies appear unsustainable – it’s just that simple.
Late in the evening on Tuesday we received a round of emails touting the stock of OSL Holdings Inc. (OTCMKTS:OSLH) sent by some of the affiliates of Micro-Cap Consultants LLC. The involved pump outfits were Penny Stock Circle, Stock Market Quote and 1-2-3 Stock Alerts and they disclosed a compensation of $15 thousand for a 1 day awareness campaign.
The wave of email alerts was certain to attract some attention towards the stock but yesterday the company itself issued a PR that put investors into a state of real buying frenzy. Throughout the session nearly 13 million shares got traded while the previous session saw less than 900 thousand. The average volume for OSLH sits even lower at 366 thousand traded shares. The relentless buying pushed the stock to an intraday high of $0.048 and although such prices couldn’t be supported it still closed with a gain of nearly 170% at $0.035.
In the press article OSLH announced that they had acquired Go Green Hydroponics, a hydroponics, indoor gardening and cultivation supply retailer. The store is expected to reach around $3 million in revenues for fiscal 2014. Despite the impressive revenues the acquisition was valued at $1.8 million, sum that is far beyond the reach of OSL Holdings. That is why we weren’t surprised to see that the funds were provided through a debt financing transaction. Unfortunately the PR didn’t contain any details about this deal and so far an 8-k form covering the financing has not been submitted.
You will see why we are so concerned about the company issuing even more debt when you open the latest financial report which covers the quarter ending May 31. Back then the company had:
- $9910 thousand cash
- $59 thousand total current assets
- $2.1 million total current liabilities
- ZERO revenues
- $4 million net loss
In addition to these grim numbers the company has also been putting its shareholders through some devastating levels of dilution.
Back in January 2013 OSLH performed a massive 1-for-1000 reverse split but a year later, as of January 21, the number of outstanding shares had reached 152 million. Nine months later and the company had managed to double that amount because according to this 8-K form filed on September 30 the outstanding shares were now more than 300 million.
In order to boost its cash reserves in July OSLH sold a $525 thousand secured convertible promissory note to Typenex Co-Investment, LLC that coupled with the debt financing for the Go Green acquisition means that the issuance of shares may not be ending any time soon.
Despite the numerous red flags many investors are comparing yesterday’s surge to the one posted by the stock back in March when it spiked above $0.275 per share. The climb was rather short-lived though and since then the company has been constantly sliding down the chart and this Monday reached a low of just 1 cent per share. How long will the excitement last this time? Do your own due diligence, weigh all the risks around the stock and decide on appropriate time horizons for your investment in order to minimize the chances of any unpleasant surprises.
Though the company name wouldn’t suggest it, Discovery Minerals Ltd (OTCMKTS:DSCR) want to extract cannabinoids (CBD) from industrial hemp. This automatically means that, in the eyes of a lot of people, DSCR is a pot stock and like virtually all pot stocks, it went through an interesting session yesterday.
It opened the day with a small gap down, but it then surged in the right direction. It hit and intraday high of $0.0039 (which, by the way, is also a six-month high), but unfortunately, it failed to remain there and it later slumped back down. The closing bell stopped it at $0.0028 which means that it failed to register any daily gains.
Hardly the most impressive performance, but it should be noted that the ticker also managed to rack up around $405 thousand in dollar volume which means that there are some people who believe that it can go up.
Their excitement appears to be fueled by the general hype around the pot industry that we’ve witnessed over the last couple of days. Three states as well as the District of Columbia are about to vote on their marijuana laws in a couple of weeks’ time, President Obama is contemplating the appointment of a weed legalization advocate to one of the higher positions in the Department of Justice, and there are even some people who reckon that smoking pot can prevent you from catching Ebola.
We’ll need to wait and see how all these things are going to affect the industry as a whole, but it would appear that the excitement alone is enough to urge plenty of people to put their money on the line. The SEC and FINRA have warned numerous times, however, that this may be a risky move. There are some companies in the sector that are really trying to monetize on the growing pot business, but there are also some who are just sitting there, relying on hype to bump up the share prices. So, which category does DSCR fit in?
The management team seem determined to prove to us that they really are going to make some money out of their business plan. About a month ago, they even uploaded a few photos and a 55 second video of some hemp plants. They say in their press releases that the anticipated yields from the upcoming harvest (DSCR forgot to tell us when it’s going to take place) are huge.
All in all, if the official announcements are anything to go by, DSCR really wants to become a solid CBD producing company. Unfortunately, the figures in their latest quarterly report suggest that this is going to be a tall order to fill. Here’s what the company recorded on June 30:
- cash: $367
- total assets: $1,367
- total liabilities: $480 thousand
- NO revenue since inception
- quarterly net loss: $105 thousand
So, you have the facts and figures. All you need to do now is decide whether DSCR really want to make any sort of progress in the hemp industry or whether they’re simply relying on the hype and excitement.
While you’re at it, however, you might want to consider the fact that, according to the latest report, during the nine months ended June 30, 2014, DSCR converted a total of $277,500 worth of debt into 670,000,000 shares of common stock. The conversion rate, in case you haven’t calculated it already, comes in at around $0.0004 per share.