Borislav Tonev

No Rest For Neutra Corp (OTCMKTS:NTRR)'s PR Department

by Borislav Tonev August 20, 2013
5NTRR.pngAs soon as Neutra Corp (OTCMKTS:NTRR, NTRR message board) mentioned the words "medical" and "marijuana" in one of their press releases, the ticker exploded onto the scene. The excitement was so huge that in a matter of days, the share price skyrocketed from well under $1 all the way up to around $4. At one point, it even reached a 52-week high value of an astonishing $6.50.

If you've been around penny stocks for the last year or so, you'd probably know that this is not that big of a surprise. Tens of small cap ventures used the strategy of announcing entrance into the medical cannabis business to boost the price and in all cases, we saw some eye-popping runs in the green direction. Problem is, the impressive movements turned out to be quite short-lived and, unfortunately for the people who jumped in on the hype, NTRR was just one of the many companies that tumbled down as soon as the excitement died out a bit. How bad was the crash? Well, on August 2, just four months after NTRR reached its 52-week high, the ticker closed at just $0.30. That's around 95% in losses and a big gaping hole in the pockets of the unfortunate few who bought the expensive stakes.

In recent weeks, however, medical cannabis ventures have woken up once again. On August 8 Dr. Sanjay Gupta, CNN's chief medical correspondent and a long-term opponent of using pot as a medical treatment confessed that he might have been wrong in his views and shortly after, a documentary called "Weed" was aired, in which he explains that using marijuana might actually be a great way of combating various diseases. This had a profound effect on trading in Pennyland and, more specifically, on the tickers that are in one way or another involved in the medical pot business.

Companies like Medical Marijuana Inc (OTCMKTS:MJNA) and Growlife Inc (OTCBB:PHOT) registered a couple of great sessions and in some cases, the daily gains amounted to no less than 40%. Once again, NTRR were not far behind. On August 8 the ticker gained around 18%, the next session added a further 15%, but the most impressive movement was witnessed last Tuesday when the price inflated by about 59%. This means that in just under two weeks, NTRR has gained a massive 187% and unlike MJNA and PHOT who slipped and fell once the hype had subsided, NTRR shows no signs of slowing down.

Truth be told, MJNA and PHOT don't seem to be that excited about issuing a press release every couple of days, so the massive PR spree probably played its part in NTRR's run as well. The amount of new announcements coming out of the company headquarters is truly astonishing. We last wrote about NTRR back in June when the PR department was again firing on all cylinders and, by the looks of things, not much has changed since then.

The announcements are once again designed to sound as optimistic as possible, with wording that seems carefully put together. Unfortunately, the information isn't too convincing. For the umpteenth time, they are informing us about joint ventures with companies that seem to have no Internet presence whatsoever, they talk about targeting new markets and visiting trade shows. At the same time, when you open the products section of their website, you'll see that they are determined to commercialize a wide range of products without telling us how (or when) they're going to do it.

One thing is for sure, it won't be easy with the sort of financials displayed in their 10-Q for the period that ended on April 30. Here they are:

  • total assets: $138 thousand in cash
  • total liabilities: $496 thousand
  • no revenue since inception
  • quarterly net loss: $218 thousand

You might argue that the latest report looks better than its predecessors and you'd be right. Even so, NTRR say that the cash on hand can cover less than a month's worth of expenses. Whether they have managed to secure additional funding remains unknown (apparently, they can't be bothered to issue a press release about that), but one thing that they did disclose in the 10-Q is the share issuance. And there's quite a lot of it.

9NTRR_logo.pngAround 3.6 million shares (the total number of outstanding stock as of June 18 was 8.6 million) saw the light of day between February and June and they were issued as a conversion of notes payable. More worrying, however, is the value at which the debt was converted - $0.10. You would have probably guessed that there's quite a lot more notes that could be turned into shares at any point and if the discounted stock hits the market, it could wreak havoc with the share price. Make sure you have this in mind while considering all the risks of a potential NTRR investment.

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