Creative Edge Nutrition, Inc. (OTCMKTS:FITX) Swept Up By Another Surge

Creative Edge Nutrition, Inc. (OTCMKTS:FITX) was having a rough couple of sessions before it was pushed up by the surge that launched some of the most “prominent” marijuana tickers up yesterday. Now, the company seems to be on its way to the top of the charts, having leaped 23.91% up in little more than half a session of fevered trading.

In light of this most recent peak of interest in FITX‘s stock, some of the red flags surrounding the company obviously bear repeating. Currently, one of the biggest among those is FITX‘s tendency towards exaggeration in both its PR and its filings.

FITX has made a habit of issuing press releases that are vague, boastful. More than a few such publications can easily be misinterpreted, and some can even be called contradictory. For instance, the following title hit the web on March 21 – “FITX announces private funding for the build out of the world’s largest and most advanced legal cannabis production facility“. Later, when FITX‘s CEO, Mr. Bill Chabaan, was confronted with facts, he was forced to admit that this is not really the case. Rather, it turns out that he would absolutely “love to be the world’s largest”, but claims that he has “never said anything about the world’s largest thing in any news release”. A number of similar inconsistencies become obvious if one takes the time to examine the company’s PR.

Another example of the company’s tendency towards exaggeration can be found in FITX‘s latest financial report. The funding acquired from selling 7.5% of the interest in FITX‘s first facility, to a yet undisclosed third party, was reported under “revenues”. This, while not technically untrue, can be viewed as an example of “creative accounting” – a tactic sometimes used by firms to make their balance sheets appear more impressive than they really are. 

Moreover, no information was reported on the alleged purchase of a second building site that the company announced in its May 12 press release, and the report clearly states that such a deal should have been included.

So let’s recap. What does FITX have at the moment? An unlicensed facility and high hopes that the company will get a permit to use it. Financials that appear passable at first glance, but turn out to be somewhat less impressive if one actually takes the time to read the whole report. Dubious PR that could get the company suspended, if its management is not careful.

Maybe this is why FITX requires the corporate counsel of a “leading national law firm”. The fact that the company has hired some legal help, presumably to put some consistency in the whole situation, may be taken as a step in the right direction. But is it too little, too late?

As usual, it’s up to the investor to decide if it is wise to gamble on high risk stocks. However, it may be a good idea to heed the warnings in the alert that was issued by the SEC – the agency whose job is protecting investors from fraud.

Another company that was launched sky-high on hype, hope and boastful PR yesterday is Tranzbyte Corp. (OTCMKTS:ERBB), who had registered an impressive 23.53% climb by the time of the closing bell.