Cannabis-RX Inc (OTCMKTS:CANA) – Another Wild Pot Stock
Cannabis-RX Inc (OTCMKTS:CANA) went through its first day of active trading on Friday and in just six and a half hours, it managed to shift nearly 190 thousand shares. This resulted in a dollar volume of more than $550 thousand which is impressive, but it also brought about a turbulent performance which isn’t.
The ticker opened the session at $4.50 per share and started sliding almost immediately. It was soon down to just $2, but it seemed primed and ready for a run. Some intense buying brought it to an intraday high of more than $7, but unfortunately, the pressure at these sort of levels proved to be too much. The closing bell rang when CANA was sitting at $1.90 per share.
Clearly, the performance is not the stuff of dreams, but some people reckon that a few optimistic press releases might result in a less violent behavior. The future should tell us if they’re right or not, but in the meantime, we might as well take a look at the company’s situation and see if it actually deserves its market cap which, at Friday’s close, amounts to more than $290 million.
This figure is quite a bit bigger than the majority of newly-born penny stocks, but then again, CANA doesn’t appear to be the typical OTC-listed enterprise.
The company started off as a development stage entity trying to design and commercialize a “stretching apparatus” for gym enthusiasts. The plan didn’t quite work out and last year, they entered the real estate business.
Some properties were acquired and cash was raised through promissory notes. The Q3 statement shows us that they failed to register any revenues, but it does also present us with the balance sheet of a relatively solid-looking enterprise. Here’s a summary of the most important figures as of September 30, 2013:
- cash: $3.6 million
- current assets: $4.1 million
- current liabilities: $183 thousand
- quarterly net loss: $39 thousand
In January, they decided to change the company name and branch out into the scorching hot marijuana industry. The actual business plan won’t be switched, but CANA will put more focus on cannabis growers who are looking for facilities for their operations.
A few 8-K forms that were published over the last couple of months tell us that some more money was raised and a few more properties were acquired. On the whole, the outlook seems bright and it would appear that CANA simply needs to start signing contracts. There are, however, a few things that you might want to consider.
CANA‘s CEO, Llorn Kylo, is at the helm of another real estate enterprise called Berkshire Homes Inc (OTCBB:BKSH) and their latest reports show us that Mr. Kylo is still struggling with generating revenues over there.
There’s one more thing to bear in mind: CANA is a $290 million real estate company, but it appears to be using a virtual office. The same address (down to the number of suite occupied) is, by the way, also used by another penny stock called LaSalle Brands Corporation (OTCMKTS:LSAL).
Investing in a newly-born penny stock is never risk-free. Considering all the dangers and doing a lot of due diligence is, as always, absolutely essential.
