Hop-on, Inc. (OTCMKTS:HPNN) Spikes On Announced Marijuana Products
With the massive exposure of the emerging marijuana industry and the widespread optimism for its future among investors more and more pennystocks are tempted to switch their business plans. In the past couple of weeks we have seen numerous examples of stocks that were largely forgotten by the market suddenly jump on the scene and soar up the chart after just mentioning the green plant.
Hop-on, Inc. (OTCMKTS:HPNN) may have initially attracted attention thanks to its patent licensing deal with Microsoft but the positive effect it had on the share price lasted for a single day. That is why HPNN decided to jump on the marijuana bandwagon and yesterday posted a press article on their website. In it they revealed that their wholly owned subsidiary Re-Medical is going to offer transdermal patches containing cannabis extracts.
As a result HPNN surged by 75% and recovered a portion of its lost positions. The stock closed the session at $0.0014 after more than 667 million shares changed hand throughout the day. The volume was now where near the 3.4 billion that got traded on the day the deal with Microsoft was announced but were still three times higher than the average for the company.
Looking past the bold and overly-optimistic claims about the future though reveals quite a different story. HPNN are in a terrible financial state with just $352 in cash and a negative working capital of $1.2 million at the end of September, 2013. In order to secure new finance sources the company may have to increase its authorized shares and put its shareholders through even more dilution. Currently they have burned through 7.44 billion out of the 7.48 billion authorized.
Looking through the last financial report the only time the name Re-Medical popped up was in connection with a distribution agreement between the two companies back in 2010. Even yesterday’s announcement leaves investors with a lot of unanswered questions. How will the company afford to launch the marijuana patches in just one month when they have almost zero funds? Furthermore they have just applied for the patents covering the products and it is highly unlikely to receive them in such a short time.
Presently HPNN is just another extremely cheap pennystock that is enjoying the effects of the marijuana hype. Any long-term position should be preceded by serious due diligence and unbiased assessment of their potential.
Another company that just joined the industry and is making a hype-fueled run up the chart is Triton Distribution Systems, Inc. (OTCMKTS:TTDZ). In just a month their stock rose from less than $0.002 to more than a cent. Such heights might tempt investors to cash in and yesterday after opening $0.0139 TTDZ dropped down to a close of 0.012 per share. Latteno Food Corp. (OTCMKTS:LATF) are also going through a series of corrections having closed in the red for the last three sessions. Yesterday they slashed another 20% of their value and returned to double zero price ranges sitting at $0.008.
