Another Pot Stock Gets the Axe. Fusion Pharm Inc (OTCMKTS:FSPM) Suspended
As you probably know, there are quite a lot of people out there who are willing to give you advice on how to invest your money. Some do it through emails, others prefer the message boards, and there are also some who use social networks. One prominent player in the game is a Twitter user who goes by the name Wolf of Weed Street. As his nickname would suggest, he specializes in the pot sector and he has gathered quite a following over the last couple of months. On Thursday, he alerted investors about Fusion Pharm Inc (OTCMKTS:FSPM). Less than twenty-four hours later, FSPM got suspended by the SEC.
The moral of the story is, we reckon, pretty clear – putting money on the line because someone says that this or that company is great is never a good call. As we have said numerous times on these pages, doing your own due diligence and looking through the financial statements is absolutely essential before committing to an investment.
The thing is, once you take a peek at FSPM‘s reports, you’ll see that unlike the majority of pot-related OTC companies, they seem to be doing a lot more than just issuing press releases. The Q1 statement, for example, came out last week and it contains the following figures:
- cash: $674 thousand
- current assets: $1.1 million
- current liabilities: $458 thousand
- quarterly revenues: $304 thousand
- quarterly net loss: $47 thousand
Sure, they are still unable to achieve a positive bottom line, but they seem to be trying and a quick comparison between the latest report and the ones before it reveals that FSPM is actually making some progress. Or is it?
Many pot stocks received temporary suspensions over the last few months and most of them got halted because, according to the SEC, there were questions regarding the accuracy and adequacy of publicly available information. In the case of FSPM, the suspension was placed because there is uncertainty regarding, among other things, the company’s assets, revenues, and business transactions. A slight difference, indeed, but it could mean that the figures above do not represent FSPM‘s real financial situation.
Of course, speculation on the message boards is plentiful. Some people reckon that there will probably be an investigation and, although the Commission said nothing about it, we wouldn’t be too surprised if that is indeed the case.
This, in turn, has led the more loyal shareholders to believe that the SEC will do a thorough check, find out that there’s nothing wrong, and will let trading go back to normal. We’ve yet to see something similar happen, but, as we all know, everything is possible in Pennyland.
Plenty of people will be happy to see FSPM avoid the dreaded Grey Market, but even if it manages to do it, investors should be well aware of the fact that there is one major red flag – convertible debt. The latest report tells us that between January and May, the company turned $26,700 worth of notes into 2.67 million unrestricted shares.
Grey Market or not, if the people who received these shares decide to get rid of them, the ticker is in for a nasty crash.