Like many cannabis stocks Mentor Capital Inc (OTCMKTS:MNTR) moved after the election and made record highs, followed by a healthy pullback. Shares went from .25 cents post election to $4.25 in a parabolic fashion and had (what looks to be) a blow off top in late February. Some market analysts think we will not see these prices again in 2017. Shares in Mentor closed recently at $1.70.
The company announced as part of it’s recent news that it has closed and paid in cash and stock a $1.0 million multi-faceted financing program for G FarmaLabs Limited. The initial Mentor financing is structured to provide funding for real estate and working capital. G Farma has also been provided Mentor public shares to participate in any potential upside that may or may not occur on account of the G Farma relationship with Mentor. Under contract, Mentor is providing multi-year consulting support with regard to accounting structure, audits and sophisticated financings. MNTR has the right to participate in any future debt or equity raise, and receives a small percentage of G Farma if the cannabis company goes public, except if that action is supported by Mentor Capital and equity participation is thus otherwise more fully provided. At the close, the respective principals, operating and professional representatives of the parties met and discussed the next phase of their long-term relationship.
Mentor Capital Inc (OTCMKTS:MNTR) CEO Chet Billingsley opines that the cannabis and medical marijuana sector has begun to enter a consolidating phase. Larger, well financed leading cannabis brands, like G Farma, will naturally evolve to dominate the space. Mentor’s ideal portfolio partner is a larger, successful cannabis company that needs expansion capital on its path to be one of those dominant players, and is seriously interested in then economically moving into the public market while maintaining maximum founder’s equity.
The passionate and knowledgeable team at G Farma is a perfect match for Mentor’s program of financial support and public market access. “We have great respect for the intelligence, hard work, business systems and approach to risk management that the G Farma team has put together. They well deserve the success that is headed their way, and Mentor Capital, Inc. will be doing everything we can to support their growth and ambitions. It will be a pleasure,” says CEO Billingsley.
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Ata Gonzalez, the G Farma founder, adds, “Finding the right cash infusion to help your cannabis company remain an industry leader is difficult. Mentor Capital and its CEO Chet Billingsley have been friends of our brand since 2013. They provide an amazing financial vehicle for G FarmaLabs and have already offered tremendous expert advice on complex business issues. The common denominator with Chet is to always be ‘fair’ to everyone, as if you were entering into a contract with your brother.”
The Company seeks to come alongside and assist private medical marijuana and cannabis companies and their founders in meeting their liquidity and financial objectives, to add protection for investors and to help incubate private cannabis companies. This is a noble effort and business plan, but I can tell you they will need to be supported by a health demand for shares where investors understand the story.
Without a health stock price and a revisit to the $4.00 level it will be a long grind lower and the company will have little choice but to use the only currency available to them. This is a trap which seems to be setting up for many companies in the cannabis space who are pre-revenue.
I look forward to following the story, and I think management is sincere in their desire to build an incubator for the cannabis sector – the market will tell us how they think MNTR is progressing with appreciation share prices. Only time will tell. For continuing coverage on shares of $MNTR stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!