Marijuana Hype Bumps up the Volume for Discovery Minerals Ltd (OTCMKTS:DSCR)

Though the company name wouldn’t suggest it, Discovery Minerals Ltd (OTCMKTS:DSCR) want to extract cannabinoids (CBD) from industrial hemp. This automatically means that, in the eyes of a lot of people, DSCR is a pot stock and like virtually all pot stocks, it went through an interesting session yesterday.

It opened the day with a small gap down, but it then surged in the right direction. It hit and intraday high of $0.0039 (which, by the way, is also a six-month high), but unfortunately, it failed to remain there and it later slumped back down. The closing bell stopped it at $0.0028 which means that it failed to register any daily gains.

Hardly the most impressive performance, but it should be noted that the ticker also managed to rack up around $405 thousand in dollar volume which means that there are some people who believe that it can go up.

Their excitement appears to be fueled by the general hype around the pot industry that we’ve witnessed over the last couple of days. Three states as well as the District of Columbia are about to vote on their marijuana laws in a couple of weeks’ time, President Obama is contemplating the appointment of a weed legalization advocate to one of the higher positions in the Department of Justice, and there are even some people who reckon that smoking pot can prevent you from catching Ebola.

We’ll need to wait and see how all these things are going to affect the industry as a whole, but it would appear that the excitement alone is enough to urge plenty of people to put their money on the line. The SEC and FINRA have warned numerous times, however, that this may be a risky move. There are some companies in the sector that are really trying to monetize on the growing pot business, but there are also some who are just sitting there, relying on hype to bump up the share prices. So, which category does DSCR fit in?

The management team seem determined to prove to us that they really are going to make some money out of their business plan. About a month ago, they even uploaded a few photos and a 55 second video of some hemp plants. They say in their press releases that the anticipated yields from the upcoming harvest (DSCR forgot to tell us when it’s going to take place) are huge.

All in all, if the official announcements are anything to go by, DSCR really wants to become a solid CBD producing company. Unfortunately, the figures in their latest quarterly report suggest that this is going to be a tall order to fill. Here’s what the company recorded on June 30:

• cash: $367
• total assets: $1,367
• total liabilities: $480 thousand
• NO revenue since inception
• quarterly net loss: $105 thousand

So, you have the facts and figures. All you need to do now is decide whether DSCR really want to make any sort of progress in the hemp industry or whether they’re simply relying on the hype and excitement.

While you’re at it, however, you might want to consider the fact that, according to the latest report, during the nine months ended June 30, 2014, DSCR converted a total of $277,500 worth of debt into 670,000,000 shares of common stock. The conversion rate, in case you haven’t calculated it already, comes in at around $0.0004 per share.