Summary
- This is the second of a 10-part series.
- Timing is important - the Investor Summit will be held in Colorado from April 20 through April 22, 2015.
- Expect an increase in marijuana sector news releases leading up to, during, and after this event.
- The Marijuana Business Conference and Expo will follow the Marijuana Investor Summit, less than one month later, on May 19-21, 2015.
- I began collecting data for this series on March 27, 2015, and hope you find the series helpful in your MJ sector investment decision-making process.
Part I of this series is available here. The below introductory section is repeated for all parts. It can be skipped if you read Part I, but is included for completeness and for those who have not read and digested the content in Part I.
Important Upcoming Event Dates
The Marijuana Investor Summit is scheduled for April 20, 2015, in Colorado.
It will be followed by the Marijuana Business Conference & Expo on May 19-21, 2015, in Chicago.
All 10 Parts of This Series Will Continue to Follow the Following Format:
- First, the firm's name, ticker symbol, and state of incorporation are provided. Recall that more than 50% of the marijuana sector firms accessing capital in the U.S. capital markets are incorporated in and are subject to Nevada corporate law. This is a disproportionately large percentage for the marijuana sector, since only a bit above 8% of the overall "market for corporate law" has been captured by the state of Nevada.
- Second, I include the firm's logo and 2-year chart, developed from theOTCMarkets website, on March 28, 2015. I have captured this long-term trend, and identify and note the relatively high price-per-share event date, if it occurred during the February-March-April 2014 period and surrounded the March 21, 2014 event date, when the index of marijuana stocks peaked (See Note the Seasonal Patterns, below).
- Third, I provide a link to the firm's website, its business description, working capital position, as provided in its latest, publicly available financials, with some significant fundamentals that I recommend you focus on before investing in the firm or its securities.
- Finally, the firm's 1-month chart, developed and linked to the Seeking Alpha website is provided, where relevant, fundamentals-based articles might be identified and read to "tool up" and decide whether or not you are interested in buying and holding securities from firms in this emerging sector of the U.S. economy.
Note the Seasonal Patterns
The chart below captures a 2-year trend for the MJIC Marijuana Global Composite Index. Note the relative seasonal lows occurring at year-end and during December 2013 and December 2014. This pattern is consistent with (1) individual investor tax-loss selling for portfolio "losers", followed by (2) recovery and the January effect. The MJIC index peak is consistent with the March 21, 2014 event date, as follows:
"... on March 21, 2014, Federal Court Judge Michael Manson granted an application to medical marijuana patients seeking a temporary injunction to retain the right to produce marijuana for personal use until the court renders a judgment on the constitutionality of the MMPR."
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Extraordinary stock price increases attract regulatory body attention. The meteoric rise in the MJIC index was followed by a Securities and Exchange Commission trading halt:
"An SEC halt of a leading company and a negative Seeking Alpha(emphasis added) article about another led to widespread selling."
Reviews of the 15 marijuana stocks in this second installment follow:
#16 - BreedIT Corporation (OTCQB:BRDT) is a Delaware corporation. The 2-year chart follows:
(click to enlarge)
The firm's website notes that it acquired an exclusive worldwide license for unique, highly sophisticated decision-making software used for the purpose of advanced agriculture breeding (the "IDSS Software").
The firm's high closing stock price occurred on March 19, 2014, at $0.88 per share (see above chart).
The firm had a significant positive working capital position as of September 2014 and December 2014, with a market capitalization of $5.8 million as of March 28, 2015. This firm has quite a bit of cash on hand as of December 2014, but revenues are insignificant. It is issuing common stock to fund operations.
There are some related-party payables and convertible notes payable. Some conversions occurred at ranges between $0.02 and $0.05 per share. The firm is generating a tiny amount of revenues and some significant losses, while issuing shares, warrants, and a very significant amount of stock options for services.
Below is the 1-month chart from the Seeking Alpha website:
There are some Seeking Alpha articles published in the distant past that can be accessed using the above link.
#17 - Monarch America, Inc. (OTCQB:BTFL), formerly Cannabis Kinetics Corporation (through December 2014), Lingas Ventures, Inc. (through May 2014), and Lingas Resources, Inc. (through June 2013), is a Nevada corporation. The 2-year chart follows:
(click to enlarge)
The Monarch America website describes the firm as a management and consulting company delivering products, services, and turnkey solutions to the legal and regulated marijuana industry.
A reverse split of 1-for-10 (ex-date May 15, 2014) was followed by a forward split of 3-for-1 (ex-date December 23, 2014).
The firm had a slightly negative working capital position as of December 2014, with a market capitalization of $12.2 million as of March 28, 2015. It is generating revenues and reasonable gross profit percentages, and generated a net profit for 2014. Cash flows from operations were positive.
Below is the 1-month chart from the Seeking Alpha website:
#18 - Cannabis-Rx, Inc. (OTCQB:CANA), formerly Real Estate, Inc. (through February 2014), is a Delaware corporation. The 2-year chart follows:
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Cannabis-Rx is a self-described U.S. real estate development company looking to grow its portfolio with long-term strategic investments within the regulated cannabis industry (see the firm's website).
The firm has revenues, but is generating net losses. Cannabix-Rx had a positive working capital position as of September 2014, with a market capitalization of $31.6 million as of March 28, 2015.
Below is the 1-month chart from the Seeking Alpha website:
#19 - Advanced Cannabis Solutions, Inc. (OTC:CANN) is a Colorado corporation. No chart was available on the OTC Markets website, where the below was provided.
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The below logo was provided at the firm's new website:
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Using the above graphic, I was able to determine that the firm had a high closing stock price of $64.64 per share on March 5, 2014 (see the above 2-year chart from Yahoo Finance). Despite the temporary trading suspension by the Securities and Exchange Commission pursuant to Section 12(k) of the Securities and Exchange Act of 1934 from 9:30 AM EST on 03/27/2014 through 11:59 PM EST on 04/09/2014, Advanced Cannabis Solutions had a market capitalization of $32.5 million as of March 28, 2015, and the firm had a positive working capital position as of September 2014.
The below is from the firm's September 2014 financials:
Advanced Cannabis Solutions, Incorporated was incorporated in the State of Colorado on June 5, 2013 ("Inception")... provides real estate leasing services to the regulated cannabis industry throughout the United States by purchasing real estate assets and leasing growing space and related facilities to licensed marijuana growers and dispensary owners for their operations... plans to provide a variety of ancillary services to the industry, including the development of a proprietary line of grow mediums and plant nutrient lines, product tracking technology, and comprehensive consulting services to current and future cannabis entrepreneurs.
Below is the 1-month chart from the Seeking Alpha website:
There are many news announcements for this firm and stock, quickly accessed on Seeking Alpha by using the above link.
#20 - CannaVest Corporation (OTCQB:CANV) is a Delaware corporation. The 2-year chart follows:
(click to enlarge)
The firm's website describes CannaVest as a firm with a portfolio of companies specializing in providing the health and wellness benefits of products from the industrial hemp plant.
The firm's high closing stock price occurred on February 24, 2014, at $165.00 per share (see above chart).
The firm had a significant positive working capital position as of September 2014 and December 2014, with a market capitalization of $78.5 million as of March 28, 2015.
CannaVest has revenues and was profitable for the 9 months ending September 2014, attributed and due to a $7.9 million gain, a "quality of earnings" issue in that this gain will not recur for future periods. The firm generated a net loss for both 2013 and 2014.
Below is the 1-month chart from the Seeking Alpha website:
There are many news announcements for this firm and stock, quickly accessed on Seeking Alpha by using the above link.
#21 - Cara Therapeutics, Inc. (NASDAQ:CARA) is a Delaware corporation. The 2-year chart follows:
(click to enlarge)
The Cara Therapeutics website describes the firm's activities as developing solutions to treat pain, inflammation and pruritus with new molecular entities targeting peripheral receptors.
The firm had a relatively high closing stock price occurring on March 5, 2014, at $22.49 per share (see above chart).
The firm had a significant positive working capital position as of December 2014, virtually no long-term debt, and a market capitalization of $230.8 million as of March 28, 2015.
Convertible promissory notes have been converted to preferred stock.
Below is the 1-month chart from the Seeking Alpha website:
There are many news announcements for this firm and stock, quickly accessed on Seeking Alpha by using the above link.
#22 - Crown Baus Capital Corp. (OTCPK:CBCA), formerly Cannabis Capital Corp. (through July 2014), is a Nevada corporation. The 2-year chart follows:
(click to enlarge)
Crown Baus Capital self-describes its business activities as a development-stage company focusing on high-tech, pharmaceutical development, entertainment and media, education, and financial services industries on itswebsite.
The firm's high closing stock price occurred on March 11, 2014, at $30.40 per share (see above chart).
The firm had a very significant positive working capital position ($40 million) comprised primarily of prepaid expenses as of September 2014, with a market capitalization of $87.5 million as of March 28, 2015.
Crown Baus Capital has some loans payable to stockholders, and incurred $45 million in officer compensation expenses as follows:
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Crown Baus had not yet completed a website or logo change at the date of this writing.
Below is the 1-month chart from the Seeking Alpha website:
There are some Seeking Alpha articles on this firm, and they can be accessed and read using the above link.
#23 - Cannabis Sativa, Inc. (OTCQB:CBDS) is a Nevada corporation. The 2-year chart follows:
(click to enlarge)
The firm's website describes the firm as a fully reporting company, claiming an experienced management team, with the Kush division specializing in research and development for two medicinal cannabis strains, and the Wild Earth Naturals division.
The firm's high closing stock price occurred on January 16, 2014, at $16.26 per share (see above chart).
Cannabis Sativa had a very significant negative working capital position, as of September 2014, with $1.4 million current and $2.0 million non-current liability due to related parties, and a market capitalization of $59.4 million as of March 28, 2015.
The firm has a small amount of revenues, and is generating net losses. With convertible notes payable to both related and non-related parties, and other liabilities due to related parties, the latter, in the event of default, will be eliminated through the issuance of shares of stock at a 35% discount to market prices.
Below is the 1-month chart from the Seeking Alpha website:
There are some news announcements for this firm and stock, quickly accessed on Seeking Alpha by using the above link.
#24 - Cannabusiness Group, Inc. (OTC:CBGI) is a Nevada corporation. No chart was available on the OTC Markets website, where the below was provided.
(click to enlarge)
Cannabusiness claims to have developed an acquisition plan to acquire companies that sell products and services to include security services, e-commerce store fronts for both grow and dispensary operations, technology solutions, software solutions, and miscellaneous solutions (see the firm'swebsite).
The firm had a significant negative working capital position as of June 2014. The 10-Q filed with the Securities and Exchange Commission did not include financial statements or fully developed footnotes to the financial statements. This is probably why the SEC intervened - the significant lack of disclosure that is very, very apparent.
Despite the temporary trading suspension by the Securities and Exchange Commission pursuant to Section 12(k) of the Securities and Exchange Act of 1934 from 9:30 AM EST on 05/07/2014 through 11:59 PM EST on 05/20/2014, Cannabusiness Group had a market capitalization of $458,000 on March 28, 2015.
Below is the 1-month chart from the Seeking Alpha website:
#25 - Cannabis Science, Inc. (OTCQB:CBIS) is a Nevada corporation. The 2-year chart follows:
(click to enlarge)
Cannabis Science describes its business as research & development of medical cannabis compounds (see the firm's website).
A predecessor migrated from Colorado to Nevada, and is subject to Nevada corporate law (June 2007-).
The firm's high closing stock price occurred on February 5, 2014, at $0.2933 per share (see above chart).
Cannabis Science had a significant negative working capital position as of September 2014, with a market capitalization of $42.1 million as of March 28, 2015.
Its current debt composition is largely comprised of management fees, bonuses, and debts owed to related parties, as follows:
(click to enlarge)
Below is the 1-month chart from the Seeking Alpha website:
There are some news announcements and articles for this firm and stock, quickly accessed on Seeking Alpha by using the above link.
#26 - Canna Brands, Inc. (OTCPK:CBMJ) is a Nevada corporation. The 2-year chart follows:
(click to enlarge)
The firm provides intellectual property, branding, consulting and facilities management solutions to licensed processors of cannabis-infused goods (see the firm's website).
Canna Brands had a significant negative working capital position as of December 2014, with a market capitalization of $1.3 million as of March 28, 2015.
The firm has no revenues, and owes more than $1/2 million to stockholders and officers, as follows, for September 2014:
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... and, as follows, for December 2014:
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Some of the convertibles from debt to stock could occur at 75% of the lowest stock trade price for the 30 trading days prior to the conversion. The firm also has some unexpired warrants. Related parties are being paid interest at rates as high as 12%.
Below is the 1-month chart from the Seeking Alpha website:
#27 - Canadian Cannabis Corporation (OTCQB:CCAN), formerly Gold Party Payday, Inc. (through October 2014), is a Delaware corporation. The 2-year chart follows:
(click to enlarge)
The Canadian Cannabis website says the firm is focused on the cultivation and distribution of cannabis under Canada's new Marihuana for Medical Purposes Regulations ("MMPR"). The company claims to be a first-mover that plans to acquire multiple facilities and licenses by the start of 2015.
Canadian Cannabis Corporation had a significant negative working capital position as of September 2014, with a market capitalization of $108.4 million (U.S.) as of March 28, 2015.
The firm has notes payable in excess of $3.2 million (Canadian) due to stockholders. With more than $1.1 million in consulting fees/expenses for the most recently reported quarter, revenues of less than $50,000 might be characterized as insignificant.
Numerous related-party transactions are disclosed in the footnotes to the firm's financial statements.
Below is the 1-month chart from the Seeking Alpha website:
#28 - CannaGrow Holdings, Inc. (OTCPK:CGRW), formerly BizAuctions, Inc. (through November 2014), is a Delaware corporation. The 2-year chart follows:
(click to enlarge)
Prior to the corporate name change, this firm completed a 1-for-17,000 reverse split (ex-date February 22, 2012). The firm's website describes the business as a firm providing turnkey solutions to the cannabis industry, from seed to sale. The below photograph is displayed prominently on the firm's website:
CannaGrow Holdings had a significant negative working capital position as of December 2014, with a market capitalization of $39.8 million as of March 28, 2015.
The firm has notes payable to related parties, related-party transactions, and promissory notes, the details of which are disclosed in the footnotes to the financial statements:
(click to enlarge)
Below is the 1-month chart from the Seeking Alpha website:
#29 - Chuma Holdings, Inc. (OTCQB:CHUM), formerly Cannamed Corporation (through August 2014), and MASS Petroleum, Incorporated (through April 2014), is a Nevada corporation. The 2-year chart follows:
(click to enlarge)
Chuma and its wholly-owned subsidiaries claim to provide turnkey financing and support solutions to the rapidly evolving and growing legal cannabis industry - "seed to sale" key business services (see the firm's website). The firm is "focused on California."
The firm had a very significant and negative working capital position as of November 2014, with a market capitalization of $17.7 million as of March 28, 2015.
Chuma has a large number of loans payable and related-party transactions. During 2014, shares were issued at $0.50 per share for services.
The below is from the firm's website. The website does not load very quickly, and it was a bit confusing when the filings were available on the firm's website but were out of sequence (e.g., 2014 to 2015 to 2014):
(click to enlarge)
Below is the 1-month chart from the Seeking Alpha website:
There is at least one Seeking Alpha article that you should read before making an investment decision on this firm. It can be accessed using the above link.
#30 - Chineseinvestors.com, Inc. (OTCQB:CIIX) is an Indiana corporation. I could not easily identify a logo for the firm on the firm's website. The 2-year chart follows:
(click to enlarge)
The company is currently working with Medicine Man Denver in the creation of a new intellectual property and industry experience-based corporate entity that will provide licensing and consulting services within the emerging cannabis sector (see the firm's website).
The firm's high closing stock price occurred on February 25, 2014, at $1.05 per share (see above chart).
The firm had a positive working capital position as of February 2015, with a market capitalization of $5.3 million as of March 28, 2015. It has quite a bit of cash. Chineseinvestors.com is generating revenues, some very favorable gross profit percentages, and some net losses.
The Chinese stock market is performing well at the date of this writing.
Below is the 1-month chart from the Seeking Alpha website:
There is an article and a news announcement for this firm and stock, quickly accessed on Seeking Alpha by using the above link.
Summary
The price per share for all 15 stocks has been in decline, when viewed in the context of the 2-year chart, but this group has 2-year charts that are favorable when compared to those in Part I of this series. Those purchasing stock in these firms, during the 2-year high, have probably been very disappointed.
Cannabis-Rx, Advanced Cannabis Solutions, and Cara Therapeutics have favorable 1-month charts. Advanced Cannabis Solutions has an extremely favorable 1-month chart. It might be worth a bit of time to investigate this firm and arrive at a decision as to whether or not shareholder value creation is likely to continue for this firm.
Chineseinvestors.com, Inc. might also represent a stock worthy of a bit of time and investigation. While down quite a bit from the 2-year high, the stock price appears to have followed a typical tax-loss selling and January effect sequence, and is trading in a relatively stable range.
The Investor Summit and the Marijuana Business Conference and Exposcheduled for April and May, respectively, are not likely to represent event dates, in and of themselves, that will result in an economically significant positive sector reaction - but individual firms are likely to make complementary news announcements during this period. Use this article, and those that follow in this series, as a source of historical reference to quickly digest these announcements in context before making a decision to buy and hold these stocks. You might prefer to set up a portfolio and/or news alert on the Seeking Alpha website for stocks you find interesting for a long-term buy-and-hold.
As always, read Seeking Alpha comments and consider them as a supplement to this article, where views might be consistent or inconsistent with positions I have taken or described.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
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