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Wednesday, October 28, 2020

An Intriguing Move for mCig Inc (OTCMKTS:MCIG)

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mCig Inc (OTCMKTS:MCIG) is a penny stock in the cannabis patch that has been correcting to the downside in recent action. While inertia has recently been lower, the stock caught some sharp upward bounce momentum to close out last week. The pop higher seems to be related to the company’s recent announcement that it has agreed to sell its VitaCBD brand to Stony Hill Corp., in exchange for total consideration of $850,000 in cash and common stock, and a 20% stake in VitaCBD, LLC as it converts into a subsidiary of STNY.

For those who doubted whether or not the VitaCBD brand had value, the question is answered in the simplest possible way. 80% of it is worth $850k, suggesting that they still have an un-monetized holding worth approximately $212,500. And, presumably, it wasn’t worth that much a year ago, meaning that it might well be worth more a year from now. In other words, they have monetized the asset, but retained a tether to its growth. But, while that seems fine, the question arises: why monetize a growing asset? We will look into that more in a moment. But first, let’s refresh our sense of this company.

mCig Inc (OTCMKTS:MCIG) has been a company in transition in the recent past, moving from a focus exclusively in the manufacture, marketing, and distribution of electronic cigarettes, vaporizers, and accessories under the mCig brand name into an entity that is attempting to be a far more diversified play in the cannabis patch.

According to company materials, “Headquartered in Henderson, Nevada, mCig Inc. A diversified company servicing the legal cannabis, hemp and CBD markets via its lifestyle brands. MCIG has transitioned from a vaporizer manufacturer to industry leading large scale, full service cannabis cultivation construction company with its Scalable Solutions division currently operating in the rapidly expanding Nevada market. The company looks forward to growing its core competencies to service the Ancillary legal Cannabis, Hemp and CBD markets, with broader expansion to take place once federal laws change.”

The company offers electronic cigarettes and related products through its online store mcig.org, as well as through the company’s wholesale, distributor, and retail programs. It also constructs commercial and modular buildings which are aimed at the cannabis cultivation market.

The company was formerly known as Lifetech Industries, Inc. and changed its name to mCig, Inc. in August 2013. mCig, Inc. was founded in 2010 and is headquartered in Henderson, Nevada.

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On the VitaCBD brand and product line heading 80% out the door, MCIG execs had this to say:

“MCIG has worked diligently to build the VitaCBD product line, but recognizes the need for a strategic partner to assist in branding and marketing of the product line. After months of discussions and negotiations, we believe we have found that partner with Stony Hill. We are very bullish on the future revenue potential of VitaCBD and its ability to create value for our company and its shareholders.” (Paul Rosenberg, President and CEO of MCIG)

According to the company’s recent release, VitaCBD is a highly dedicated group devoted to engineering the purest hemp derived products available. Both hemp and cannabis contain dozens of cannabinoids, naturally occurring chemical compounds, but it is cannabidiol (CBD), in particular that offers the potential for health and therapeutic benefits without the high. Hemp plants typically contain elevated levels of health-enhancing CBD, but by definition contain only trace levels of THC. This makes the hemp plant attractive to those seeking its potential health benefits as part of an antioxidant-rich lifestyle.

Chris Bridges, President of Stony Hill, stated, “This transaction will expand the Stony Hill platform of products and accelerate its growth strategy in the industry. Stony Hill and mCig will have a synergistic relationship, combining management and personnel with a dedicated focus on the promotion and deployment of the VitaCBD brand. We are excited to have mCig as a strategic partner and a shareholder in Stony Hill.”

Currently trading at a market capitalization of $88.9M, MCIG has a chunk ($286K) of cash on the books, which stands against about $281k in total current liabilities. MCIG is pulling in trailing 12-month revenues of $1.4M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -30%. We will update the story again soon as developments transpire. For continuing coverage on shares of MCIG stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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