MediJane Hldgs Inc (OTCMKTS:MJMD) – a Pot Stock Surrounded by Red Flags

MediJane Hldgs Inc (OTCMKTS:MJMD) looks like the perfect candidate for a paid stock promotion. The business plan, company name and ticker symbol were changed recently, there was a ten-for-one split a couple of months ago and the company is now trying to make a name for itself in a hot industry – the medical marijuana business.

Take a look at the older filings and you’ll spot some other things that are well worth considering. Before the restructuring, MJMD (then known as Mokita, Inc.) was headed by a person called Irma N. Colón-Alonso. There are some complaints about Ms. Colón-Alonso on websites such as RipOffReport.com and she was once involved with another penny stock called Dephasium Corp (OTCMKTS:DPHS). She resigned from her positions at DPHS shortly before the company became the target of one of the most horrific promotional campaigns of 2013. In case you’re wondering, Ms. Colón-Alonso left MJMD on February 27 (just three weeks ago).

As you can see from this report, back in 2011, MJMD‘s legal counsel duties were taken care of by an entity called Carrillo, Huettel & Zouvas, LLP. Luis Carrillo and Wade Huettel, as you probably know, are two lawyers that got charged by the SEC with performing an international market manipulation scheme. As if that wasn’t bad enough, another, older filing shows that on October 1, 2010, the company issued a total of 3.3 million shares in exchange for $33 thousand. The ten-for-one split means that some people now hold around 33 million shares and they paid just over $30 thousand for them.

There’s no shortage of things to suggest that a paid pump is coming, but we should note that as of right now, there isn’t a promotional campaign. Nevertheless, the stock is soaring.

Nearly 1.2 million shares changed hands during yesterday’s session resulting in a dollar volume of just under $1.7 million. The ticker closed the day at $1.47 per share which, according to the company profile on the OTC Markets’ website, commands a market cap of more than $90 million.

The surge was caused by an 8-K form which tells us that MJMD has entered into a licensing agreement with an entity called Phoenix Bio Pharmaceuticals Corporation. According to the agreement, MJMD has the right to exploit intellectual property owned by Phoenix Bio for the territory of North America. There is a vague description of the products that can be produced with the help of the aforementioned intellectual property, but unfortunately, there’s no press release that could give us a few more details.

What’s more, Phoenix Bio doesn’t appear to have any sort of internet presence outside MJMD‘s filings and even the public company’s website appears to be down at the moment. The license was paid for with shares, but MediJane will still need some money if they are to do anything and, according to the latest 10-Q, they don’t have any. In fact, as of November 30, the company had just $1,263 in total assets and around $620 thousand in liabilities.

As you can see, there’s no shortage of red flags around the company and the fact that MJMD is now a pot stock adds yet another layer of risk. The SEC has been cracking down on newly born marijuana related enterprises that seem a bit too optimistic about their new business plans and, as a result, two such enterprises – Petrotech Oil & Gas Inc (OTCMKTS:PTOG) and Aventura Equities (OTCMKTS:AVNE) – received suspension orders by the Commission. AVNE‘s trading was renewed a couple of days ago, but, as you can see from the chart on the right, the ticker is not doing brilliantly.

Doing a lot of due diligence before putting any money on the line is absolutely essential.