At the beginning of August, the medical marijuana sector in Pennyland was already a bit overcrowded, but it would appear that Refill Energy, Inc. (OTCMKTS:REFG
, REFG message board
) or, as they prefer to call themselves, Medical Cannabis Payment Solutions Inc, decided to join the party. News of the merger and the change in the business model came through on August 7 and it marked the first, rather eventful days of trading. There were ups and downs, increased volume and scary drops and on the whole, REFG's performance can be characterized as quite turbulent. On Friday, the ticker gained around 27% and we decided to see if this could be a sign of growth in the long run.
At this point, there's not much to support this. When they announced the new business, they said that they are developing a special system that uses a variety of technologies, including radio frequency identification, barcode identification etc. which should make organizing the processes of planting, harvesting, processing and selling medical marijuana a whole lot easier.
Two weeks later, they announced that they are about to launch Spark - a communication suite that provides high definition quality VOIP connection, a data management portal and a faxmail service. That sort of product is not the first thing to come to mind when you think about the medical marijuana industry, but even so, the new system should mean that some sort of revenues will be coming in and looking at REFG's Q2 financial statement, we can see that they definitely need them. Here are the figures as found in the report:
- current assets: $2,916 in cash
- current liabilities: $111 thousand
- no revenue
- quarterly net loss: $56 thousand
As if the financials weren't bad enough on their own, we read in the document that two former investors have filed a lawsuit against REFG for approximately $200 thousand. The management team say in the report that according to them, the complaints are without merit and the litigation should be hampered by the statute of limitations, but we still reckon that keeping it in mind might not be a bad call since you can never know what the Court might rule. This, however, isn't our biggest worry.
With less than $3 thousand in the bank, REFG can't afford much publicity, but even so, someone decided that it would be a brilliant idea to raise some awareness around the ticker. Normally, when third parties decide to promote a stock, they employ either the newsletters, or entities that create landing pages and distribute paper mailer brochures directly to investors. The people who wanted to get traders excited about REFG, however, have taken on a different approach - radio advertisement. Numerous investors around the message boards report having heard the ticker being mentioned during commercial breaks on radio stations throughout the US and this puts things in a different perspective.
This means that there is a promotional campaign running for the stock and the third parties that paid for it (we've yet to learn how big the budget is) will probably want to get some of their investments back. REFG's latest report shows that there are certainly people who can profit from the raised awareness. During Q1 of 2013 a total of 10 million shares were issued as a conversion of a $10 thousand note. That's quite a lot of stock (according to the OTC Markets website, the float amounts to no more than 15 million shares) and it's massively discounted which, in turn, means that, if someone is to release it on the open market, the effect on the price will be absolutely catastrophic. The charts for Xumanii International Holdings Corp (OTCMKTS:XUII) and Petrosonic Energy Inc (OTCMKTS:PSON) are here to give you an idea of how badly things could end up. Make sure you have this in mind when making your investment decision and even if you decide to take advantage of the awareness campaign, timing every single move carefully is absolutely crucial.