Enertopia Corp. (OTCMKTS:ENRT) Continues To Rise
Yesterday Enertopia Corp. (OTCMKTS:ENRT) continued the surge it began on Friday, gaining another 24% in market value on a nearly 2 million dollar volume.
ENRT has been on an upward-bound roller-coaster since the beginning of 2014. Leaving the Canadian gold business and entering the world of medical marijuana has done miracles for the company’s market value. After its recent red streak, the hype again pushed the ticker upwards in the last two sessions. But do investors really have a cause to be enthusiastic about ENRT stock?
ENRT supporters and pumpers have repeatedly stressed out that ERNT is listed as OTCQB, a fully reporting company, which implies that it is a serious enterprise. What pumpers and supportive investors consistently fail to mention in their boasting is the fact that, although ERNT is fully reporting, its reports are nothing to brag about:
- cash: $89 thousand
- current assets: $165 thousand
- current liabilities: $564 thousand
- NO REVENUES TO DATE
- net loss: $149 thousand
Such figures, while unimpressive in and of themselves, are not uncommon for newly appointed marijuana stocks that are yet to leave their development stage. In the case of ENRT, the company’s tendency to issue toxic warrants and stock options is far more worrying than its poor financials.
To elaborate – the company has been funded through heavy issuance of stock and warrants. The most recent example for that is a press release from Jan. 10, 2014, in which ENRT announced that it will make yet another private placement to supply itself with $1 million in working capital. Company stock will be sold in units, each of which costs $0.10 and consists of one share, as well as 1/2 of a warrant for the purchase of a share of ENRT stock at the price of $0.15, exercisable in the next two years.
In addition, ENRT currently has two joint ventures with two different partially owned partners, ownership over which has also been acquired mainly through stock options agreements.
This practice of paying with stock has given the company the opportunity to enter the marijuana market with some cash on hand, and provided it with some breathing room. However, it is ultimately bad news for investors, because so many people can be issued ENRT shares at a fraction of their current market value.
Despite all of the red flags, ENRT managed to reverse its strong red streak and is again climbing the charts. The latest development it announced was the hiring of Mr. Ken Faulkner to showcase opportunities to investors. The recent joining of Dr. Robert Jean Melamede, president and CFO of Cannabis Science Inc. (OTCMKTS:CBIS) to the advisory board was also deemed noteworthy enough for a press release. Both of them have been compensated with stock as well as money for their involvement with ENRT.
