Right before the start of Friday’s session the Securities and Exchange Commission suspended the stock of Fortitude Group Inc, Inc (OTCMKTS:FRTD) from trading. This was the sixth pennystock operating within the marijuana industry to get suspended with the previous one being Fusion Pharm Inc (OTCMKTS:FSPM). It seems that the SEC is continuing to focus on suspicious marijuana stocks and investors should really heed their official statement about the dangerous around the industry.
have been making numerous unfulfilled promises about tens of millions of revenues in the past the suspension was most likely caused by the recently announced buyout deal. We warned our readers that the deal was surrounded by red flags – the company that wanted to buy FRTD
was not disclosed and more importantly they were willing to pay 12 cents for every FRTD
share. The previous close before the suspension saw the stock trade at $0.02, a price that is exactly six times lower. The deal was supposed to be completed by the end of the month but we will see how the trade suspension will influence the negotiations.
finally filed their financial report for the first quarter of 2014 and it is so riddled with errors that if they weren’t already the report would have certainly gotten them suspended. According to it at the end of March the company had $412 thousand cash while at the same time cash equivalents had increased by $63 million for the period. Not to mention that this increase uses the exact same number as the total assets of the company.
Looking at the stock issuance reveals another rather strange phenomenon. FRTD
began 2013 with 440 million outstanding shares and finished the year with the exact same amount. We don’t know how that is possible when there were more than 125 million shares issued during the period.
will resume trading on June 9 most likely on the Grey Market. Stocks coming out of suspension usually suffer a devastating drop in share price and FRTD
is likely to have the same fate. For example Growlife, Inc (OTCMKTS:PHOT
), once the
leading potstock, crashed by more than 58% on the day their suspension ended going from 50 cents to just $21. At the moment they are sitting at exactly 9 cents per share.
With the increased activity of the SEC trading marijuana stocks or those being targeted by paid pumps has never been riskier. That is why it is paramount to do your own due diligence before attempting any trades involving pennystocks.