Fusion Pharm Inc (OTCMKTS:FSPM) Might be in for a Bumpy Ride

2013 was a major year for Fusion Pharm Inc (OTCMKTS:FSPM). As we mentioned in our previous article, back in March, they announced that their PharmaPods containers are perfect for growing marijuana. This, in turn, led to a collaboration agreement with Growlife Inc (OTCBB:PHOT) which, the management team says, should lead to a more refined product and greater exposure.

Being a company that deals in the medical marijuana business, FSPM went through some intense trading over the last couple of days. As you probably know, virtually all cannabis penny stocks experienced something of a renaissance when Colorado began allowing the sale of recreational pot.

That, coupled with the fact that FSPM‘s principal office is located in the Centennial State, helped the ticker achieve some impressive results. Between December 27 and January 3, it managed to jump from around $0.30 per share all the way to $0.63. On Friday, however, it slid heavily and wiped out nearly a third of its value, finishing the day at $0.43. The question on everyone’s mind at the moment is: “Is the drop just a momentary hiccup, or is it a sign of something worse to come?”.

Quite frankly, it’s still too early to say for sure but we should point out that FSPM wasn’t the only marijuana stock to hesitate on Friday. Medical Marijuana Inc (OTCMKTS:MJNA), Hemp, Inc. (OTCMKTS:HEMP), Terra Tech Corp (OTCBB:TRTC“>TRTC), and Cannabis Science Inc (OTCMKTS:CBIS) all finished last week in the red which means that the hype around the industry might be subsiding.

Then again, FSPM‘s 31% loss might be just a normal consolidation which is often witnessed when a penny stock registers a few consecutive green sessions. We’ll see if the ticker is in for another surge in the next couple of days, but in the meantime, we should mention something that could serve as a major obstacle in the longer run. We’re talking about the FSPM‘s financial statements. More specifically, the lack of such.

Fusion Pharm is, without a doubt, a solid, working entity. What’s more, when you check out the company’s filings, you’ll see that the fiscal 2012 ended with a positive bottom line – something that is nothing but a distant dream for the majority of penny stocks out there. Unfortunately, the company is becoming somewhat sloppy when it comes to reporting their financial situation. The statements for the first and second quarters of 2013, for example, came out after some significant delays and back in November, when they were supposed to publish the results for the period ended September 30, they said that they need a few more days to iron out all the details and claimed that they anticipate to have the report filed by November 19. Unfortunately, now, a month and three weeks after the initial deadline, the document is still not out.

And the Q3 results are actually quite crucial. As we mentioned, FSPM is a revenue generating enterprise, but when you compare the sales for the last reported quarter (the one ended June 30, 2013) with the ones for the corresponding period of 2012, you’ll see a 55% revenue decrease year-over-year. You’ll also note that FSPM now have a lot more debt to take care of while the current assets have shrunk.

At the same time, the number of issued and outstanding shares has doubled and if this trend continues, it might scare away quite a lot of people. That’s why, at least until we have some more up-to-date information, a potential investment carries its risks and considering all of them carefully is absolutely crucial.