Cannasys Inc (OTCMKTS:MJTK) is a microscopic sub-penny play ostensibly in the cannabis space. However, the chart suggests it isn’t in any space at all, with a market cap now down well under six figures, no cash, and lots of debt. The recent news is the company’s announcement that it has entered into a Securities Purchase Agreement with Auctus Fund, LLC, a Delaware limited liability company. It also executed a 12% Convertible Promissory Note, in the principal amount of $35,750.
On December 9, 2016, Auctus funded the note for $30,000, less $5,750 in due diligence costs and attorney fees, which was retained by Auctus. In other words, MJTK is converting below market price to fund operations, which isn’t what you want to see. The stock has been mauled of late as one of the truly great implosions in the cannabis space, down nearly 95% in the past couple months. However, we may be seeing some progress toward carving out key support in recent days.
Cannasys Inc (OTCMKTS:MJTK) frames itself as a company that provides technology services for the cannabis industry. The company offers BumpUp Rewards, a membership rewards loyalty program designed for social media ties and an electronic solution for providing gifts, points, and discounts to friends and family; and CannaLIMS, a laboratory management information system product focuses on the cannabis marketplace. It has a strategic relationship with MHB, Inc., which provides a lifestyle branding agency services.
The company products serve medical and recreational growers, dispensers, and customers. CannaSys, Inc. is headquartered in Denver, Colorado.
The Company’s PR self-representation reads “We provide marketing technology services in the ancillary space of the cannabis industry. We do not produce, sell, or handle in any manner cannabis products. As the current cannabis industry grows and gains momentum around the country, technology needs for the industry have been largely under-served. Our focus on this niche element of the industry creates many efficient and profitable tools for both industry owners and consumers.”
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It should be clear that MJTK has been going in the wrong direction and has a lot of hurdles to overcome. However, this is also a player in the hottest market segment on the planet. And it has a very small float and no speculative money sitting on the trigger. That can, in itself, be a recipe for upside.
In addition, the losses have been so significant that some kind of bounce may well be in order. Cannasys Inc CEO, Michael A. Tew, penned a letter to stockholders a couple months ago that highlights some of what could still go right:
“During the past several weeks, we have worked to recapitalize our company to meet our obligations to the holders of our convertible debt as more fully described in our Schedule 14C Preliminary Information Statement that was filed yesterday with the Securities and Exchange Commission. At the same time, we have continued to build the opportunity portfolio for participants in the ancillary services sector of the cannabis industry.
As we completed the acquisition of Citizen Toke discussed below and sought funding to launch our integrated cannabis-industry service suite, we became limited by the fact that we had no authorized shares that were not outstanding or committed for issuance. Unfortunately, this limitation precluded us from timely executing on our business plan. However, we believe we now have put in motion the appropriate resources and capital strategy to effectuate our new product launches and growth opportunities.”
The chart shows just shy of -20% during the past. But the situation may be worth watching. Cannasys Inc has a track record that includes a number of dramatic bounces. Moreover, the company has seen an influx in interest of late, with the stock’s recent average trading volume running 720% beyond what we have been seeing over the larger time frame. This is particularly important with a float in play that’s tight — fewer than 25M shares. One is wise to respect the dynamic this may create — a restricted trading float and a jump in trading volume can crimp supply and push share prices higher.
At this time, carrying a capital value in the market of $52K, MJTK has minimal cash on the books, which stands against an appreciable load ($635.81k) of total accumulated debt. MJTK is making real money, with trailing 12-month revenues coming in at 102.07k. You can bet we will update this one again as new information comes into view. For continuing coverage on shares of $MJTK stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!