Creative Edge Nutrition, Inc. (OTCMKTS:FITX) Crashes on Spinoff Panic

After the market closed on Wednesday, Creative Edge Nutrition, Inc. (OTCMKTS:FITX) put up a new press release. The contents of the lengthy PR piece rocked the stock price in a bad way, with FITX closing down by nearly a third. The stock dropped 32% to $0.019 per share on a new volume spike.

The morning bloodbath on Thursday was triggered by what looked like panic selling triggered by the PR. The message FITX published concerned the company’s subsidiary that everyone is interested in – CEN Biotech – the one through which FITX is running its operation in Lakeshore, Canada. FITX plans to spin off CEN Biotech into a separate publicly traded entity ‘in the near future’. Shareholders will receive shares of the spinoff on a pro rata basis, which means they will receive shares of the spinoff proportionate to their investment in FITX.

The announcement seems to have caused a wave of confusion and anxiety among FITX shareholders, as selling smacked the price down right from the opening bell. Confusion exists insofar as some people believe the spinoff will be a new IPO and they will be participating in that. Judging from the comments on message boards and the company’s official Facebook page, other investors had no real idea how they will receive shares in the new company. This general air of confusion no doubt helped push the price down. Additionally, as the PR stated, FITX CEO Bahige Chaaban as well as all directors and other officers of the company are resigning from their positions in FITX.

CEN Biotech will be led by Chaaban, while FITX will be left in the hands of CEO James Robinson, who is referred to as a ‘noted entrepreneur’ in the field of nutrition. Pot stock analyst Alan Brochstein voiced what seemed like slight amusement over the lack of any real information about the new FITX CEO, as well as his concern over the immediate resignation of Chaaban, officers and directors.

FITX still hasn’t come up with an official statement about what the company is going to do about the Lakeshore situation and the change in local zoning bylaws which now clash with the company’s marijuana facility. The share price had just got back to its levels before the Lakeshore worry crash. What happens from this point on is anyone’s guess but volatility will likely continue for a while longer.