He has some tips too, so read the whole thing. But, his stock errors:
...in alphabetical order, beginning with
American Green, which has been trading as a cannabis company since 2012. Trading now at just $0.0002 per share, it has lost 96% of its value since spiking in late 2016 to $.005. ERBB has an incredible 29 billion shares outstanding as of March 31st, and the secret here was that the company, which never had a substantive business and generated revenue in the last quarter of just $397,064, used toxic financing allowing its convertible debt holders to convert into stock at 50% of the 52-week low, a doomed capital structure to say the least.
Cannabis Sciences is another of the "OG" cannabis stocks, trading publicly under the name since 2009. The company, which is now quite delinquent on its filings, had revenue of just $6,302 in the first three quarters of 2017. At $.03, the stock is down about 96% over the past decade as it has put out questionable press releases and has failed to accomplish much at all beyond boosting its share-count.
Cannagrow Holdings was a big stock promotion from early 2015 that traded briefly above $3.00 in late 2016 but now trades at $0.375 with very light volume. This company had a big red flag: The person responsible for preparing financial resports, Brent Crouch, is self-interested, as he owns a big chunk of the company, which has no real assets beyond receivables from its customer but stands between the owner of a facility and a Colorado license holder that leases the facility.
CannLabs is one of many companies in the lab testing sector that have failed. It went public in 2014 with the leading share in the Colorado market and had a license in Nevada. While the stock still trades, surprisingly, there is absolutely no business after Colorado shut it down for violations in 2015. The company hasn't filed a financial report since 2015. Founder Gen Murray, who was ousted, claims that the she was the victim of fraud conducted by the person who put together the reverse-merger, Steven Solomon, who was accused of fraud at Palmaz Scientific as well.
Creative Edge Nutrition was a company I thought had a chance to execute on its plans to build a massive cannabis cultivation facility in Ontario, though there were always lots of reasons to be skeptical. I actually visited the company headquarters in Detroit in 2014 and realized it was even dicier than I had figured. That should have been enough to make me run, but, I was slow to do so. When I caught management in a lie a few months later, I abandoned all hope that the company would ever succeed and avoided in my model portfolios the almost 100% decline since then. The guy who was running the show, Bill Chaaban, is a lawyer licensed in both the U.S. and Canada. The facility was never licensed and was being marketed a couple of years ago as a movie studio.
FusionPharm was a company I never trusted due to several issues, including some accounting irregularities that I uncovered as well as a bad capital structure. The company, which retrofitted shipping containers as pods for cultivators, looked very busy when I visited it in Denver in 2014, but it turned out to be a fraud, with the stock suspended by the SEC and the CEO charged in a
criminal complaint for illegal stock sales.
Generation Alpha, previously known as SolisTek trades down 96% from where it traded at the beginning of 2018, and was one about which I was optimistic at one point given its substantial revenue. The founder's decision to bring in an outsider to run the company proved to be a grave mistake. The company's lighting business imploded, and it decided to pivot into the direct cannabis industry and change its name. The good news on this one is that investors had plenty of time to figure out what was going on and sell.
Golden Leaf Holdings isn't quite dead, but it certainly appears to be headed in that direction. The company was struggling when it merged with a leading Oregon cannabis company, Chalice, changing its business model from exclusive focus on extraction to one that involved cultivation and retail as well. The founder was named CEO, but he departed earlier this year, with now 3 different CEOs since he left. Revenue in the most recent quarter grew 34% to $4.1 million, but the company continued to post big losses. The challenge for the company is a balance sheet laden with convertible debt.
GreenGro Technologies is another former high-flyer that trades at about .01 after spiking to $1.20 in early 2014 and then $0.16 in late 2016. The company has never delivered on any of its initiatives, with sales of $93,327 in Q1.
Growlife was the biggest stock in terms of both market cap and investor interest in 2014. I had some concerns with valuation, but the business model of expanding its footprint of hydroponics stores seemed promising. The SEC suspended the stock out of the blue in April 2014 for reasons that have never been disclosed, and there was never any sort of litigation subsequently. The company managed to regain its OTC listing, but it has struggled with its toxic convertible debt.
Hemp, Inc. has a great ticker but no real business. Its founder, Bruce Perlowin, was charged by the SEC with
illegal stock trading in 2016, a case that remains open. I have called out many issues with this company publicly since 2013. It hasn't filed its financials with OTC Markets in over two years. The lesson on this one is to look past the ticker!
Indoor Harvest held early promise as it pursued its aeroponics technology. After going public through the S-1 process rather than a reverse-merger, the company failed to execute. The CEO, Chad Sykes, was formerly a stock promoter, which was probably a good sign that the organization wouldn't succeed.
Marijuana Company of America has seen an incredible amount of selling by insiders and little progress in its business. The people behind it had ties formerly to Medical Marijuana, Inc., which I discuss below.
MassRoots is one of the biggest failures the sector has seen to date. The company hyped its app but was never able to monetize and drowned in toxic debt.
Medical Marijuana, Inc. has been a very controversial company since it began trading in 2009, founded by Bruce Perlowin before new management took over in 2011. The person behind the company, who died in early 2018 when he crashed his Lamborghini, Michael Llamas, had to step down as CEO when he was indicted for mortgage fraud, but he ran the company surreptitiously by many accounts. While MJNA has and continues to generate substantial revenue, it has relied upon toxic debt to fund its losses, diluting shareholders along the way quite substantially. At $0.05 per share, the stock trades on volume that continues to erode and is down 90% from where it was in early 2014. The company promised in 2013 to begin filing with the SEC, a promise it has yet to fulfill.
Notis Global, better known by its predecessor name, Medbox skyrocketed in late 2012 to over $100 per share but now trades at $0.0002. The company's founder, Vincent Mehdizadeh, took on toxic financing and also got squeezed in his personal investment account along with CEO Bruce Bedrick by margin calls on the stock. The company also had to restate its financials, and it was never able to recover. The details are spelled out in the
SEC litigation with the company.
Pazoo struck a deal to open a Steep Hill cannabis testing lab in Nevada, but struggled to do so. I actually visited the facility in 2015, which finally was licensed in 2018 but not under the Steep Hill name. The company relied on toxic debt financing, which was its ultimate downfall.
Sunset Island Group is a more recent cannabis play that failed. The guy behind it ultimately, Joseph Wade, used a different company, 1PM Industries, before trying to exploit investors with this one, which I
called out publicly and then followed up with additional information about how the
insiders cashed out $3 million. The company was delinquent on its filings for 2017 until just recently, and the filings revealed that the company never booked a dime of revenue despite claims to have generated it. This is a prime example of why it is so important to know the financiers.
Terra Tech investors might not agree that the company is dead, but the prospects are grim in my view. Earlier this month it revealed it is borrowing money at 5% per month! I was both a critic of the company but also a supporter until late last year, when yet another lawsuit was filed against the company, which has been plagued by not only legal issues but also incredibly poor financial decisions. The company failed to see how the industry was getting financed in Canada and continued to rely on toxic debt, which left it disadvantaged to rivals. The regulatory transition in California challenged the company, which also operates in Nevada, and its sales have been in decline as losses expand.
