SK3 Group, Inc. (OTCMKTS:SKTO) Bounces Back Up
Shareholders of SK3 Group, Inc. (OTCMKTS:SKTO) must be really thankful for the widespread influence of the massive marijuana hype. The unprecedented optimism sparked by the first legal sale of marijuana for recreational use in the state of Colorado is still going strong even now, more than two weeks later, pushing the entire industry up the chart. And as we said prior to this general change in sentiment SKTO was sitting deep in the double zeroes with little chance to leave them any time soon.
But now even though the stock is still having more days finished with losses than with gains it is trading for more than 2 cents per share. Yesterday SKTO were able to retrace their steps upwards after suffering harsh correction at the end of last week and closed 44% up at $0.022. Although the company is operating within the medical marijuana sector lately their efforts have been focused on Dharmanol,a product that doesn’t feature the psychoactive component of the plant. In December SKTO announced that the first batch of Dharmanol has been manufactured and is ready to begin distribution in California.
With all the enthusiasm for the future of marijuana still flying around investors have the opportunity to earn massive profits as well as suffer devastating losses. That is why doing you due diligence should never be neglected and even more so when dealing with pennystocks.
The company also boasts some rather impressive financial results. At the end of September SKTO had:
• $129 thousand cash
• $22.7 million current assets
• $2.3 million current liabilities
• $17.5 million revenues
• $3.2 million net income
• $2.3 million current liabilities
• $17.5 million revenues
• $3.2 million net income
Not only did SKTO manage to generate $17.5 million in revenues but they had a profit in excess of $3 million. Quite impressive but as is the case with most pennystocks things are not as they seem. All those millions are in the form of licensing and marketing fees that are due to the company by their contracted marijuana collectives. The problem is that they are having trouble collecting the money with nearly $5 million now overdue by more than 180 days.
Which explains the alarming amount of dilution that has taken place during the first nine months of 2013. At the end of 2012 STKO had 361 million shares outstanding while as of September 30 that number had turned into 601 million. They will also have to issue a total of 117 million as several quarterly installments as part of the settlement with Crystal Falls Investments.
With all the enthusiasm for the future of marijuana still flying around investors have the opportunity to earn massive profits as well as suffer devastating losses. That is why doing you due diligence should never be neglected and even more so when dealing with pennystocks. Yesterday most of the other companies operating in the sector also recovered. Growlife, Inc. (OTCBB:PHOT) added more than 33% and closed just shy of 30 cents per share. GreenGro Technologies, Inc. (OTCMKTS:GRNH) doubled in price and returned to $0.48 but has a lot more to climb if it wants to reach the highs from last week.
