Borislav Tonev

The Pump for Medical Cannabis Payment Solutions (OTCMKTS:REFG) Takes its Toll

by Borislav Tonev January 24, 2014
8REFG.pngThe 2014 promotional efforts for Medical Cannabis Payment Solutions (OTCMKTS:REFG, REFG message board) started more than two weeks ago and we should note that the results of the touting look far better than the ones witnessed last year. At least for the time being.

As you probably know, REFG was the target of an awareness campaign back in September and October, 2013. At first, the pump employed some unorthodox methods such as radio advertisements, but soon after, the newsletters jumped in and a few landing pages were created for good measure. There were a few peaks, but on the whole, the stock performance was absolutely devastating. REFG dropped from a height of $0.65 at the beginning of September to just $0.15 at the end of last year.

When the pumpers came back to the ticker on January 7, they managed to lift it up almost immediately. A few hours after we received the first promotional email for 2014, REFG was already up by about 48% and although the performance has been somewhat shaky, the ticker seemed determined to stay above the $0.20 per share mark.

Yesterday, however, it experienced a more serious drop that left some investors concerned. REFG opened the session at $0.24 (about 4% above its previous close), spent about an hour in the green, but then plummeted and, eventually, closed the session at $0.201. Perhaps more worryingly, a record-breaking 4.9 million shares changed hands meaning that the dollar volume stands at well above the $1 million mark.

Looking at the message boards, we can see that some people are afraid of a more consistent slide while others claim that the drop is simply a healthy consolidation preceding a prolonged run in the right direction.

The truth is, nobody can say for sure what's going to happen over the next few sessions. On Wednesday, REFG issued not one, but two press releases but even they weren't able to influence the price movement. It seems that the only thing capable of pushing the ticker up is the pressure from the promoters. Sooner or later, however, they'll need to move on to their next picks and when that happens, the company's business performance will be the only thing keeping the stock afloat.

Unfortunately, in that aspect, things look grim. Take one of Wednesday's press releases, for example. The headline would have you believe that REFG are launching a solution to the cannabis industry's banking issues. As you probably know, there are some restrictions around the payment processing related to recreational and medical marijuana purchases and a platform that can find a way around them could potentially bring in a lot of money.

When you read through the press release, however, you'll see that they're just starting to explore the opportunities for coming up with a solution. No deadlines are given and we have no idea if they'll be successful or not.

What's more, a piece of news hit the wire yesterday that could render all their efforts completely useless. As you can see from this article, more and more people are lobbying for the removal of all the banking restrictions on marijuana businesses.

1REFG_logo.pngAs for the rest of REFG's products, it would appear that not everything is going according to plan there as well. If you check out the company website and, more specifically, the page about the S2S solution, you'll see that the suite was scheduled to be "released late 2013". Currently, it still appears to be under development.

As if that wasn't bad enough, the latest financial statement (which we covered in our previous article) reveals that the company is experiencing some serious problems with the financing of their operations.

All in all, despite the latest press releases and despite the fact that it's still managing to avoid a more violent correction, REFG remains a risky stock. Doing a lot of due diligence and carefully estimating the dangers of a potential investment is absolutely crucial.

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