Cannabis-Rx Inc. (OTCMKTS:CANA) Devastated On Its Second Day of Trading
Last Friday marked the first day of active trading for the stock of Cannabis-Rx Inc. (OTCMKTS:CANA) and it certainly was a turbulent day for them. The stock opened at the massive $4.5 per share, slid down, run back up again to an intraday high of $7.20 but ultimately closed the session at $1.90. The display was far from encouraging but investors remained positive.
Yesterday though the stock crumbled under the pressure and wiped nearly 50% of its value plummeting just below the dollar mark to close at $0.99. Throughout the day more than 900 thousand shares got dumped on the market, close to 5 times more than the volume from the previous one.
Even after the drop CANA still has a market cap of $154 million which is way too much for the company to support. As we said in our previous article the company decided to join the marijuana industry just recently and it still hasn’t issued any official statements. Although CANA has many of the same red flags displayed by the other marijuana pennystocks at least their financials seem to be a lot more stable. According to the quarterly report for the period ending September 30, back then they had:
- $3.6 million cash
- $4.1 million total current assets
- $183 thousand total current liabilities
- Zero revenues
- $129 thousand net loss
The millions in cash reserves certainly look impressive but they were acquired through the issuance of promissory notes. And since then CANA has entered into quite a few new notes. On December 10 they sold a promissory note in the amount of $4 million followed by another one for the same sum sold on February 19. Just a few days ago, on March 25, CANA filed an 8-K form covering a secured loan agreement with FALCON INVESTMENTS HOLDINGS S.A. for the total amount of $14 million. Although none of the notes feature any conversions into common stock investors should still keep in mind that those sums will have to be returned at some point.
Another huge concern are the 270 000 shares sold in private offering for $54 000, or $0.20 for each share. The price may seem rather expensive when compared to the other numbers often seen in pennyland but don’t forget that last July the company did a 1-for-110 forward split turning those shares into 29,7 million priced at $0.0018. Even after yesterday’s disastrous drop the people holding these shares can still reap massive profits at the current market prices. CANA have been able to secure quite a lot of funds but now they will have to turn them into a profitable operation which is an entirely different matter. Even their official website is completely barren of any useful information about the company.Curiously enough though the official address listed on the website is also used by another pennystock – LaSalle Brands Corp.(OTCMKTS:LSAL), a company that hasn’t filed a single report since 2008. CANA is more than likely going to remain extremely volatile in the next sessions so be sure to use caution when initiating any trades.
