CGrowth Capital Inc (OTCMKTS:CGRA) Likes the Publicity
A couple of hours before Friday’s opening bell, some small promotional outfits started sending out no-compensation emails for CGrowth Capital Inc (OTCMKTS:CGRA) and said that the stock is a “game changer.” They failed to explain what made them think so, but in a curiously well-timed move, the company tried to convince everybody that the pumpers are right.
Two hours after the first emails hit our inbox, CGRA announced that they have executed the commercial lease agreement with their new partners from Wildfire Cannabis Company LLC. They said that Wildfire will pay in excess of $2 million per year for the leased property and they also announced that they will have the right to acquire their new tenant in case they decide to do so. The sale price will represent three times Wildfire’s annual revenues and half of it will be paid with restricted shares.
We don’t know whether the perfect timing of the promotional emails in relation to the press release is a coincidence or not, but we saw at the end of last week that investors simply didn’t care. In a matter of six and a half hours, they traded more than $200 thousand worth of shares and pushed CGRA up to a close of $0.0077 per share.
People are clearly quite excited about the news, but we’re still not entirely convinced. Also on Friday, CGRA published their report for the first quarter of 2015 and they presented us with the following figures:
- cash: $1,729
- current assets: $185,087
- current liabilities: $1,911,198
- quarterly revenue: $46,963 (a 58% drop on a quarter-over-quarter basis)
- quarterly net loss: $210,358
These sort of figures aren’t really in line with the “game changer” argument, and we should probably point out that a few questions pop up around CGRA‘s new partners as well.
Wildfire is a private entity which means that we don’t know what its financial situation is. We do know, however, that it doesn’t have a website and we also know that Wildfire Cannabis Company LLC, the company that is about to spend more than $2 million on rent alone, was incorporated just over eight months ago.
Time will tell whether the new partnership will result in more significant value for CGRA‘s shareholders. If you reckon that it will and if you’re contemplating a potential investment, however, you might want to bear one important thing in mind.
The Q1 report tells us that on March 10, 2015, CGRA issued a total of 40 million shares in order to satisfy just over $25 thousand worth of notes. This means that some people were receiving a significant amount of stock at $0.0006 per share while retail investors like you were paying $0.0017 for it on the open market. As you can see from the figures above, the amount of debt at the end of the quarter was by no means small and if a larger portion of it gets converted into discounted stock, the effects on CGRA could be quite serious.
About half an hour after today’s opening bell, CGRA is sitting at just under $0.006 per share (26% in the red).
