Signal Bay Inc (OTCMKTS:SGBY) is a penny stock that has been powering higher dramatically in recent action. The strength is a combination of two major factors: 1. The company is intimately embedded into the legal cannabis narrative for Oregon and California, and that market space is set to potentially explode next week, and 2. We are seeing continued evidence of an expansionary mindset at a time when ROI is going to be actively recalculated by the market in favorable terms.
To wit: SGBY just announced another testing lab acquisition, this time in California (Green Style Analytics Lab in Yuba City, California). This acquisition brings the total number of labs now operating under the EVIO Labs brand to five. As a result, the stock is soaring higher.
Signal Bay Inc (OTCMKTS:SGBY) bills itself as a company that provides advisory, management, and analytical testing services to the legalized cannabis industry in the United States.
The company offers industry research; business and market intelligence; and advisory and consulting services, including license application support, regulatory compliance, market forecasts, and operational insights.
It also publishes industry information through online media, research reports, and publications; and operates CANNAiQ.com, a business to business information portal, as well as MarijuanaMath.com, a general interest informational Website.
In addition, the company provides Cannabis Consultant Marketplace, an outsourcing freelancing matching platform to enable cannabis companies to post projects and hire consultants.
Further, it provides operating services; and operates CR Labs, Inc., which offers analytical testing services, such as residual solvent analysis, pesticide screening, microbiological screening, terpene analysis, and cannabinoid potency profiling of cannabis and cannabis-infused products to growers, processors, and dispensaries.
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As we have covered a few times during the past six weeks, the transition from a black market context to a legal, regulated market for cannabis implies a number of changes. Things need to be standardized, measured, taxed, etc. SGBY is one of a handful of key players laying down an operational infrastructure specifically aimed at taking advantage of that newly born niche.
“We provide data collection and industry research as well as help entrepreneurs in the cannabis space get licenses and put them in touch with capital opportunities,” explained CEO of Signal Bay, William Waldrop. “To date, our consulting and research expertise has been responsible for the generation of over $80 million in deal flow.”
“This key move in California will provide us a solid foundation in what is virtually a wide-open market,” added Waldrop.
By the end of 2016, Signal Bay is expected to have 5 of its EVIO Labs operating in total, helping more than double the Company’s 2015 revenues of a little under $600,000 to over $1.4 million. By 2020, Mr. Waldrop expects the Company to be doing over $45 million in annual revenues operating 30 EVIO Labs.
CEO William Waldrop stated, “We are very proud to announce the first of many EVIO Lab locations in the state of California. Green Style Analytics Lab currently services around 1300 accounts throughout Northern California including Humboldt, Trinity and Shasta counties to the north and Placer, Calaveras and Sacramento counties to the south. Founder Catherine Emond and her team have done a tremendous job building relationships with cultivators, processors and dispensaries throughout the region. Founded in 2010, the longevity and sizable client base are both testaments to their efforts in growing the business to date.”
As we have contended with SGBY in the past, to the extent the company can convince the market it’s able to invest in expansion, the market will probably reward the company’s shareholders unless or until debt becomes an overwhelming issue or unpredictable legislative turns remove the growth narrative in this space.
Now commanding a market cap of $35.1M, SGBY has an extremely small store of cash on the books, with total assets just under $2.2M, which compares with an appreciable load ($1.50M) of total accumulated debt. At this point, the balance sheet is not an issue. The only thing that matters here is the California proposition on recreational cannabis legality. This stock is a straight up call option on that vote here. We will update the evolution of the story very soon. For continuing coverage on shares of $SGBY stock and other hot penny stock picks, sign up for our free newsletter today and get our next hot stock pick!