Fortitude Group, Inc. (OTCMKTS:FRTD) Crumbles to Pieces
On Monday the stock of Fortitude Group, Inc. (OTCMKTS:FRTD) managed to double its price and closed the day just short of 3 cents per share. The impressive performance corresponded with a massive increase in investors’ interest towards the company resulting in a nearly record-breaking number of 204 million traded shares.
All the commotion was caused by the latest PR which revealed that FRTD have received a letter of intent for their buyout. Yesterday though, on the very next day, the stock suffered a devastating crash wiping nearly 40% of its gains and dropping down to $0.017.
In our previous article we warned you that both the company itself and the buyout deal are surrounded by red flags. In the past FRTD have made countless announcements in which they always speak about millions of future revenues. Their pre-paid cash card is supposed to bring $33 million in yearly revenue from transactions. The VaporVites marijuana vaporizers should generate $15 million in sales for 2014 alone, while the PRIMARQ deal according to the company is going to results in the staggering $200 million a year.
Now let’s take a look at each of them. The card has been nothing more than a big fiasco right from the start. FRTD missed its launch date, then they took down the card for rebranding giving in the new name affinity black card, which in turn caught the attention of American Express due to the use of “black card” forcing yet another name change to Affinity Elite Card.
On April 8 FRTD announced an initial order for the VaporVites and the first products should have been delivered on April 20. Well, on May 16 it was revealed that they this order was now expected to be delivered in the first week of June. Meanwhile the PRIMARQ deal was first announced in July last year and has still not been closed.
With all of this in mind it is rather strange that a company is willing to pay 12 cents for each FRTD share according to the terms of the buyout. It is even more suspicious that the name of the acquiring company has not been revealed due to a confidentiality clause. FRTD has not been at such high price levels for the past two years and at the start of the year they had exactly $1250 in total current assets and zero revenues. Yesterday they were supposed to file the financial report for the first quarter of 2014 but that also didn’t happen. FRTD don’t even have an official corporate site at the moment.
In the next couple of days the stock should remain extremely volatile. The buyout agreement has a 10-day due diligence period with the eventual final transaction expected to occur at the end of the month. Do your own due diligence and take into account all of the risks before committing to any trades. The rest of the marijuana industry also suffered harsh corrections yesterday. Creative Edge Nutrition Inc. (OTCMKTS:FITX) lost another 17% and dropped below 5 cents per share while United Treatment Centers Inc. (OTCMKTS:UTRM), a pennystock that describes itself as the CNN of the marijuana industry, bombed by 44% closing the session at $0.0026.
