Starting from an opening price of $0.37 on May 12 the stock of Sino Agro Food, Inc. (OTCBB:SIAF) found itself at 52 cents just 9 sessions later. Unfortunately for the shareholders of the company though such prices proved to be far too unstable and for the last two sessions SIAF have been crashing back down. Just before the long weekend the company dropped by more than 10% and returned to $0.43 per share.
The last we talked about SIAF
was more than a year ago and it seems that nothing much has changed. The company still reports massive revenues of tens of millions but investors are reluctant to place their confidence in the stock.
Let’s start with the fundamentals of the company. According to the latest financial report at the end of March SIAF
- $18 million cash
- $224 million total current assets
- $40 million total current liabilities
- $90 million revenues
- $25.9 million net income
So why a company with a positive bottom line of more than $25 million is having troubles maintaining a share price of more than 50 cents? Well, there a couple of reasons actually.
First of all, SIAF‘s
operations are located in the People’s Republic of China which immediately puts most investors on their guard. Secondly, despite the rather massive numbers consistently reported by the company it is still issuing quite a lot of shares considerably diluting its common stock. For 2013 another 37 million shares were issued for conversion of debt, followed by another 11.9 million just for the first quarter of 2014. Currently the number of outstanding shares is 149 million out of the 170 million authorized. If the dilution continues at the same pace SIAF
might be forced to increase their authorized shares for a third year in a row.
The company has also been talking about their intentions to uplist to the NASDAQ exchange for years now but so far they have not been able to do so.
In a recent PR SIAF
announced that the conference call initially scheduled for today will be held on June 2. If the management team and the recently hired Chief Financial Officer are able to alleviate some of the concerns around the company they might boost the performance of the stock. For now though it is for the best to do your own due diligence and to take into account all
the possible risks before committing to any trades.
On Friday the marijuana industry suffered yet another blow when Fortitude Group, Inc. (OTCMKTS:FRTD
) became the sixth potstock suspended by the SEC in the last three months. The suspension came just days after FRTD
announced a rather suspicious buyout deal with an undisclosed company. The stock will resume trading on June 9 most likely on the Grey Market and with a significant drop in price.