Muscle Warfare Inter (OTCMKTS:MWAR) Surges Before the Ticker Change

CBGI.pngA year ago, the company that we will soon know as Cannabusiness Group, Inc. (OTCMKTS:CBGI) was called Embark Holdings, Inc. (traded under the EMBK symbol) and it’s fair to say that things weren’t going quite according to plan. They did have a couple of operating subsidiaries and they did generate around $130 thousand in revenues during the twelve months ended December 31, 2012, but they failed to turn profitable which meant that someone had to do something.

In June 2013, they completed a merger with another entity called Muscle Warfare Inter (OTCMKTS:MWAR). The company name and the ticker symbol were changed and having gone through the latest financial reports and press releases, we can see that the operations were given a massive boost.

The third quarter of 2013, for example, ended with more than $1 million in revenues. There were some problems like the 35% year-over-year drop in sales, the net loss, and the disturbingly large working capital deficit, but on the other hand, they completed a couple of additional acquisitions, retired some shares, and the CEO, Daniel Amato, said that he is looking forward to a much more successful 2014.

A stock dividend was also approved in January and MWAR engaged in numerous activities that should have brought attention to both the company stock, and to its products. Despite the positive news, however, investors didn’t seem to care all that much. MWAR was thinly traded and the performance was quite shaky. In fact, at the time of the ticker change, the price was hovering around $0.03, but by January, it had dropped to less than a penny.

Friday looked like it was going to be just another day of uneventful trading, but around 1PM, the market sentiment towards the ticker suddenly changed. In just three and a half hours MWAR managed to shift the larger part of the 36 million shares that it registered as daily trading volume while the price jumped by 451%. The trade value comes in at over $420 thousand which is an absolute record for the stock.

At first, the jump doesn’t appear to be caused by anything that is immediately obvious. There are no paid promotions, the latest press release is now a month old and there are no new financial reports. The only possible reason for the run is the fact that MWAR are going through some corporate changes… again.

The new name is Cannabusiness Group and, starting today, the company stock will be traded under the CBGI symbol. We can spot a few problems immediately.

For one, there’s no official press release informing us about the changes. We don’t know whether the new entity is the result of a reverse merger and we’ve no idea if the sports nutritional business (that generated the respectable Q3 revenues) is about to be spun off.

Cannabusiness have come up with a website, but the description of their corporate strategy isn’t explained clearly enough. On the one hand, they advertise themselves as real estate acquisition and leasing firm that will focus on zoning issues, but on the other, they are apparently going to do some business in the marijuana industry.

CBGI_logo.pngOn the whole, investors have nothing solid to work with and the huge price gains from Friday could only be caused by the new name which suggests that CBGI is now a pot stock. A press release will probably come out soon and it should shed some light on the current changes, but until then, CBGI remains a very risky investment option.

Especially considering some of the information contained in Item 4 (Issuance History) of the latest financial statement. You can see from it that a couple of years ago, the company printed millions of shares for conversion of debt and other purposes and the majority of them were valued at prices much lower than the current one. That, we reckon is something well worth considering while making your investment decision.

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