Neutra Corp (OTCMKTS:NTRR) Slides as the Marijuana Hype Subsides
The chart on the right covers Neutra Corp (OTCMKTS:NTRR)’s performance over the last twelve months and we reckon that it does a pretty good job at illustrating how inconsistent the ticker behavior really is. A point also hammered home by last week’s chart movement.
As you probably know, NTRR is a company developing a range of products for the booming marijuana industry and as such, its stock (alongside the rest of the pot tickers) skyrocketed during the first sessions of 2014, fueled by the start of legal sales of cannabis in the state of Colorado. Unfortunately, the enthusiasm might be proving to be a bit short-lived.
GreenGro Technologies, Inc. (OTCMKTS:GRNH), Growlife Inc (OTCBB:PHOT) and Cannabis Science Inc (OTCMKTS:CBIS) showed some serious corrections at the end of last week and this could be a sign that the bubble is bursting.
NTRR also slipped and fell by around 19% on Friday while shifting around $426 thousand worth of shares. This is particularly odd since, unlike the majority of pot stocks that moved simply because of the hype around the industry, NTRR actually came up with an announcement that they’re going to develop a range of new and exciting products specifically aimed at the exploding market in Colorado.
Nevertheless, it did drop and some people are probably wondering if there’s a chance of recovery.
Well, if they do indeed roll out the new products and start selling them in the near future, we could see a prolonged surge in the right direction. Then again, investors should keep in mind that this task will be difficult to achieve with just $91 thousand in total assets.
They can, of course, borrow some money like they’ve done in the past, but if they do it through the same notes that feature an extremely discounted conversion rates, they are bound to infuriate the shareholders.
Speaking of which, when you take a closer look at NTRR‘s filings, you’ll spot a few eyebrow-raising discrepancies. If you check out Note 5 of the quarterly report for the period ended April 30, 2013, you’ll see that the convertible note issued on February 28, 2013 can be turned into common stock at a rate of $0.10 per share. According to Note 6 of the latest 10-Q, however, the conversion rate is $0.01 per share. NTRR haven’t filed any forms informing us about a change in the terms of the financing but the stock issuance from the last couple of months suggests that the conversion price is, in fact, the one featured in the report for the quarter ended October 31, 2013 – $0.01 per share. This, as we mentioned on Friday, is a whopping 90% below the 52-week low and an even more shocking 98% lower than Friday’s close.
That’s a rather big red flag all on its own, but it’s even more disturbing when you have in mind that NTRR have yet to prove themselves as a revenue generating enterprise.
That’s why, while optimistic press releases and emails from Quality Stocks (such as the one we received yesterday) might give the ticker a nudge in the right direction, they can not guarantee a prolonged run. NTRR will need to put up a solid business performance to ensure that and so far, they’ve been spectacularly unsuccessful. Careful evaluation of the risks is, as always, absolutely crucial.
