Discovery Minerals Ltd. (OTCMKTS:DSCR) Bursts In as New Cannabis Stock
In a sudden twist of fate, former mining company Discovery Minerals Ltd. (OTCMKTS:DSCR) decided to transform into a marijuana company. Although the project is just a distant blueprint, it was enough to stoke interest and make DSCR rise by 220% to $0.0032, on buying volumes above $2.6 million.
DSCR announced that through its subsidiary, Deer Park Development Corp., it would be seeking out land for potential hemp cultivation. This is a side industry to the growing of medicinal cannabis plants, but still serves to classify DSCR as a marijuana stock- with all the upward drive of the stock price. Of course, there is still time between making an actual purchase of farmland, and realizing the sales potential of the venture.
Unfortunately, DSCR is not filing audited results with the SEC, and we have only its OTC disclosures. As of September 30th, 2013, the company claimed to hold:
- $15,000 cash
- $656,000 total current liabilities
- $602,000 annual net loss on zero revenues
- $138,000 net gain for the quarter ended September 30th, 2013
While the positive results for the last quarter seem like a change of fortunes compared to the deepening losses of past periods, DSCR achieved this on an unusual item, and it is clearly not a company of regular results.
DSCR is also one of the sub-penny tickers with more than 1.9 billion shares outstanding- and though its market cap is relatively small at $6.6 million, there is a risk that the large share base may bring down the price. The share float is given at 41 million, a more positive factor. Also, DSCR recently retired one billion common shares to improve its position.
But despite the promises, DSCR remains a stock rising unusually high on PR and future promises, and all of this has an effect on investors’ forums, where the enthusiasm is fanned even higher. Remember that the qualities of DSCR were touted by Lions of Wall Street in the summer of last year, but not even an email campaign helped to bring the ticker above the penny levels. Even the anti-dilution measures were mentioned months back- and the only difference is that DSCR made a distant promise to be a cannabis company.
It is not unusual for pink sheet stocks to change identities quickly to make use of the latest hot industry to boost a rock-bottom stock price. In the past weeks, several similar stories emerged, among them Media Technics, Corp. (OTCMKTS:MEDT) that plans to offer LED lights for hydroponics growers. MEDT has been retreating for two days, almost losing half the value reached at the peak.
Fortitude Group, Inc. (OTCMKTS:FRTD) is still caught in the upswing, growing ten times in the past trading days from $0.002 to two cents. It is now a matter of time before the fast rise leads to profit taking and a change in pace.
If you decide to pick a sub-penny ticker for its fast rising potential, it is best to be aware that the corrections often come deep and fast at the peak of the trend, so avoid DSCR unless you can afford to lose the investment in part or in whole.