Fusion Pharm Inc (OTCMKTS:FSPM) Pushed Further Down
2014 is proving to be a turbulent year for Fusion Pharm Inc (OTCMKTS:FSPM). The marijuana craze that started in January dragged the ticker out of the $0.20 to $0.30 per share levels that it had occupied for so long and sent it on a rather impressive run.
The excitement around the pot industry was certainly strong enough to entice a lot of buying, but the company also lent a helping hand with more than a few optimistic press releases. This whole thing resulted in a 52-week high of a mind-bending $9.20 per share registered on March 5.
Surprisingly or not, the ticker didn’t cope too well under the pressure of these levels and a slide began. It proved to be especially terrifying over the last three weeks. Since March 18, the ticker has registered only five green sessions while the cumulative losses stand at around 56%. So, what’s the reason for the devastating drop?
The suspension of one of FSPM‘s biggest partners, Growlife Inc (OTCBB:PHOT), certainly played its part. PHOT was considered by many to be the most solid penny stock enterprise in the marijuana business and the SEC’s decision to put a temporary ban on trading sent a shockwave throughout the OTC Markets. Many pot stocks suffered some heavy blows, but companies like FSPM who had previously partnered with PHOT were particularly affected.
But although PHOT‘s suspension certainly had an impact on FSPM‘s stock performance, we reckon that there are some other factors that contributed to the drop. Namely, the monumental amounts of hype and excitement.
The marijuana craze did mean that traders had the chance to enjoy some healthy profits during the exciting climbs displayed by tickers like FSPM. Now that the enthusiasm is dying down a bit, however, the stocks are not doing particularly well. Even a few promotional emails from Penny Stock Market Bull weren’t enough to break FSPM‘s fall.
Which is something of a shame since the company published its 2013 financial report yesterday and in it, we can observe some positive trends. Here’s a summary of the most important figures as of December 31:
- cash: $216 thousand
- current assets: $360 thousand
- current liabilities: $622 thousand
- yearly revenues: $594 thousand
- yearly net loss: $42 thousand
While not perfect, the balance sheet looks a lot more solid than the ones presented by other small cap enterprises. It should also be noted that FSPM raised around $1 million through the sale of restricted stock a few weeks ago and solidified their cash positions a bit. What’s more, a comparison between the results above and the ones posted at the end of last year reveals that the revenues are growing while the net loss is shrinking.
It’s not all good news though. The ticker is still sitting comfortably above the $2 mark, but there are some people who can get FSPM shares at prices a lot lower than that. Page 4 of the notes to the financial statement tells us that there are nearly $94 thousand worth of notes that are convertible into stock at $0.01 per share. It also informs us that last year FSPM turned $170 thousand worth of debt into around 3.1 million shares (average conversion rate comes in at $0.05 per share). Scroll down to the subsequent events section and you’ll see that during the first quarter of 2014, they issued nearly 1.9 million shares at just $0.03 a piece.
Clearly, the company is moving forward with its business plan and seems to be a lot closer to profitability than the majority of its small cap counterparts. Even so, there are still some things that could wreak havoc with the price. Considering them carefully before putting any money on the line is absolutely essential.
