Cannasys Inc (OTCMKTS:MJTK) is a sub-penny player in the cannabis space that has taken its share of pain during the “sell the news” phase for cannabis-related stocks. However, we wanted to point out the company’s recent activity on the M&A front: MJTK execs recently announced that the company signed a letter of intent to acquire Alliance Financial Network, Inc.
AFN is a Colorado-based fintech play that “provides a unique, proprietary digital transaction and mobile payment solution. AFN, a federally registered financial institution, has developed, owns and operates eXPO, its electronic eXchange POrtal.” While it would be fantasy to believe AFN will ever be able to compete with the likes of financial giants (who are spending literally billions of dollars and deploying far better talent to compete for the exact same end market) as far as financial transaction technology, we ask the reader to consider what might be going on under the surface here – and we will get to that soon. First, let’s get familiarized with this company.
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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According to the release, “eXPO provides access for consumers and businesses to transfer funds electronically, whether consumer-to-consumer, consumer-to-business, business-to-consumer or business-to-business. eXPO delivers electronic payment solutions to multiple industries. AFN is currently working with companies in a number of vertical markets that can leverage the eXPO system immediately because of its universally compliant foundation and its ability to be scaled rapidly.”
If there is a really interesting story here, then it would be in how one might combine a viable transaction module in the cannabis space. This is, in the end, a marketing company. They focus on messaging things according to the assumptions, biases, and needs of their target end market.
Those involved in any way in the cannabis space are a highly circumnavigable group, in terms of those factors. If one were to tailor a payments module specifically for that crowd, they might grab disproportionate market share in a fast-growing market.
Imagine being at a dinner party and grabbing the largest slice of a pie. And then finding out the pie was growing fast. It’s a good situation. They will need to actualize and execute. But the potential is there, from what we can see.
According to the company’s recent release, CannaSys will acquire AFN by issuing a controlling equity stake in the proforma company, whereby AFN will become a wholly owned CannaSys subsidiary. The combined company will market AFN’s products, and platforms, as well as the CannaSys suite of products. As part of the transaction, AFN’s nominees will become directors and key officers of CannaSys, and the Cannasys, Inc. name will be changed to Alliance Financial Network, Inc. On February 12, 2017, CannaSys solidified its commitment to closing the transaction with a direct investment in AFN.
“I could not be more excited about AFN’s core products, its management team, and its exponential growth prospects across multiple industries,” commented CannaSys CEO, Michael Tew. “eXPO™ was created to meet the demands of a changing landscape within the payments industry, and it demonstrates how the fintech sector continues to introduce revolutionary product offerings.”
Earning a current market cap value of $4.2M, MJTK has virtually no reported cash on the books, which stands against virtually no total current liabilities. The company is pre-revenue at this point. We will update the story again soon as further details emerge. 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!