Cannasys Inc (OTCMKTS:MJTK) is a penny play on the periphery attached to the cannabis boom like a remora swimming alongside a great white shark. The company has specialized in marketing services for cannabis product producers and vendors like loyalty programs, social media strategies, and lifestyle branding campaigns. MJTK stock is similar in opportunity horizon to some of the advanced equipment suppliers in the space in that the time is now for execution.
The action in MJTK stock has been increasingly robust following the company’s announcement in late January that it has retired most of its aged debt, promissory notes, and personnel liabilities in a strong effort to re-energize its balance sheet amidst improved operating conditions. Things have heated up even more in the past week, with gains of 51% just in that time. What’s more, the name has witnessed a pop in interest, as transaction volume levels have recently pushed just shy of 180% over the long run average.
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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This is an interesting company and an interesting example of continued maturation of the space.
The life cycle of any commodity boom after some form of deregulation (and that’s what’s going on with pot here, in terms of economics) is a rapid growth in the base of production. That makes money for producers at first. But eventually, the supply increase weighs on pricing and the build-out phase slows way down, as do the profits. Margins tighten up and capital starts to redirect away from the space.
However, during the first phase, the best money often goes to the folks selling tools and services to the producers. MJTK falls into an interesting tail of that phenomenon because they are selling something that is more and more valuable as margins tighten and things become increasingly competitive among producers.
The recent announcement is important in that it addresses the cap table, which could be an issue for this company from time to time. On December 22, 2016, the Company’s Registration Statement providing for the registration of approximately 57 million shares of the Company’s common stock to be purchased and sold by Kodiak Capital Group, LLC, became effective. In that filing, the Company reported $456,094 in convertible notes payable and notes payable of $179,717 as of September 30, 2016.
Since December 2016, CannaSys has retired approximately $140,000 of the notes payable and 90% of all aged (older than six months) convertible notes on its balance sheet, providing significant balance sheet benefit and operating leverage to the business. Additionally, the Registration Statement provides up to $1,000,000 of liquidity. The Company reported a total capital need of $1,000,000 to fund its operations, including approximately $500,000 for the retirement of convertible debt. The Company is pleased to announce that it no longer requires $500,000 for retirement of debt and can finance its operations through more cost-effective financing.
“Over the past six months, we have focused on reducing the debt exposure on our balance sheet and accessing new and more cost-effective sources of liquidity to finance the business,” noted Michael Tew, CannaSys CEO. “We now have manageable balance sheet exposure with only one or two key creditors, and significant equity financing available through our registration statement. It has been a long road, but to the benefit of our loyal shareholders as we look to future growth opportunities.”
At this time, carrying a capital value in the market of $10.7M, Cannasys, as of its most recent reporting, has virtually no cash on the books balanced by over $1.1M in total current liabilities. The company has pulled in exactly $100K over the past 4 quarters, but the sequential growth is strongly negative, with declines each quarter, and no sales in its most recent report. Nonetheless, this is a story about the future, and we look forward a follow-up chapter as events transpire. 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!
