At the end of last week PINK:MJNA found themselves with another large dip in trading and volatility and one of the biggest volume days they’ve had with over 75 million shares being traded. Down more than 25% at the blink of an eye, after such a hot run the past month might we add… this activity in particular had long investors wondering what had happened since it seemed more than just a big trader jumping ship. Initially, here at Weed Entrepreneur, we thought it was simply the stock correcting itself naturally after its hot run as of late, for some fickle reason, but what we found was a little concerning…
You won’t find this article on the Google Finance recent news column, but it’s nothing short of going viral right now within the investment community surrounding PINK:MJNA, and with a title like this, we can understand why: “Chronically Criminal, Shielding the Public Away from Medical Marijuana“. I think first of all, the title is a bit misleading because it just vaguely says “Medical Marijuana” instead of “Medical Marijuana, Inc.”, which is actually what the article sets out to undermine completely and expose what they found to be rampant fraud and misrepresentation by the board of directors.
The article was written by a speciality “group” that describes themselves as “a research collective that exposes fraud and folly in an effort to identify bubbles before they implode and our track record of success speaks for itself. In this report, we will be exposing fraud heaped on top of folly.” What’s interesting about this collective is they call themselves, Infitalis, but have little more than a Twitter and a Seeking Alpha account of which they use to expose companies they feel are wronging the public. So they could just be providing this investment justice as a side hobby. Their profile contains the following quote, which for lack of better word, we think is cool:
Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one. – Charles Mackay, 1841
After running through the entirety of the report, I’ve decided it’s probably a waste of time for us to paraphrase and analyze their report because it sounds like they have done their due diligence to a very respectable extent. We can’t say whether or not we find all of these allegations true or not but the arguments are very strong, many backed up with fact, and leave us shying away from MJNA, as many other investors obviously feel. The report by Infitialis may be long but what it does best is bolding and listing a lot of the important factors to consider (which is especially important for the average reader)
The following two lists answer a lot of questions and provide a lot of reasons for skepticism for investors who were thinking about touching an already shaky industry.
Adding insult to injury, because MJNA is a non-SEC reporting issuer, it has almost no real obligations to its shareholders. Here are a few examples of what MJNA can get away with that 99.9% of public companies cannot:
1. MJNA does not have to file financial statements with the SEC or make available any material disclosures to its shareholders.
2. MJNA does not have to file quarterly or annual disclosure reports with the SEC according to the laws and regulations of the 1934 Securities Act
3. Officers and Directors of MJNA have no obligation to shareholders to operate within Sarbanes-Oxley or any other financial controls promulgated by the Commission following the various accounting scandals that erupted in the wake of the Enron, WorldCom, and Tyco situations following the dot-com crash.
I think when put in plain terms like this… it becomes a lot of potential as well as current investors did not realize a lot of these statements, including ourselves. A company simply not having the requirement of ONE of these things is troublesome in itself, much less THREE. This isn’t to say that MJNA is breaking all these terms but without obligation, there’s always that looming possibility that they could fly under the radar in the back of your mind.
Infitialis even goes as far as to make a list labeled, “The Top 5 Reasons to Sell MJNA Immediately”. This list is stapled on to the end that leaves readers with an extra sour taste in their mouth about MJNA and really is just underlining everything they laid out in an extremely strong way:
In closing we leave you with the “Top 5 Reasons to Sell MJNA Immediately” while this stock trades at this temporary valuation:
1. As an unsolicited issuer MJNA has no active market for its shares meaning that bids or offers can be pulled immediately leading to a potential collapse of the shares.
2. The so called “Audit” and “Auditor” are in fact not qualified to Audit the company. As such, none of these purported facts and figures should be relied upon.
3. The company is run and controlled by a 28 year old fraudster with a terrible history of financial crimes and devilish ethics.
4. As uncovered by our investigation the company and its insiders have engaged in fraud by purposely omitting the background information from the disclosures made on the OTC. This alone could result in a trading halt by regulators.
5. Llamas (former CEO) owning/controlling $1.5mm worth of MJNA shares on behalf of MJNA is de-facto illegal share distribution. But it also highlights that Llamas is most probably the guy liquidating the hundreds of millions of undisclosed shares too.
I guess the last question that remains for our readers out there, is what is our take on the piece and specifically, do we believe in this report or not? I can’t say that I can confirm or deny any of the statements at this point in time but what I can say is that this is a very convincing and well put together report by Infitialis obviously. Judging by their past performance, by even just looking at their past articles and theories, it seems that they may have the benefit of the doubt with us and a lot of other investors out there. Most investors will read this lengthy article and feel it’s enough research for them to make a judgment call that MJNA is a bad investment and it will ultimately hurt their stock performance. However, there will always be the strongly optimistic to balance that out and simply exclaim that this is a shorting effort and only an opportunity to purchase more shares…
What I’m more interested in seeing, as the comments on this article reach the 400 mark at the time of posting, is if there will be as much media attention and focus on a response from MJNA. I think the PR staff at MJNA has their work cut out for them and I sincerely hope that they aren’t taking the day off as the water continues to boil while the market is closed and there is little other news out there. Before I make my judgment call against MJNA, I want to at least give them a chance to tell their side of the story, so now we wait…