Tweed Marijuana Inc. (NASDAQOTH:TWMJF)

CAPS Rating: 1 out of 5

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Member Avatar bigongit1 (63.72) Submitted: 6/23/2014 12:33:03 PM : Outperform Start Price: $2.76 TWMJF Score: -19.74

Saw this company mentioned in a New York Times article. Seems to be a real investment in this space as opposed to many other pump and dump companies.

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Member Avatar SmartAce (99.88) Submitted: 5/5/2014 3:01:02 PM : Underperform Start Price: $2.86 TWMJF Score: +26.63

jed71
turk182
jenny8675309

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Member Avatar EvanBuck (99.81) Submitted: 5/2/2014 12:34:50 PM : Underperform Start Price: $2.88 TWMJF Score: +27.47

Jed and TSIF do very good jobs at digging in to the specifics of this (most likely) pump and dump stock. However, even from a general standpoint cannabis/marijuana companies are quite questionable firms at best due to the current climate of the War on Drugs even if this stock was legitimate. A lot more states other than Colorado and Washington will need to successfully legalize and fend off the Feds before cannabis companies can even hope to become consistently profitable.

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Member Avatar TSIF (99.96) Submitted: 5/1/2014 8:08:09 PM : Underperform Start Price: $2.80 TWMJF Score: +25.25

Jed71 nailed this one and pitched it. While it may be lazy on my part and he encourages his team to "add" more "wrong" things as these type typically have a lengthy list, I think he did fine.

http://caps.fool.com/Pitch/TWMJF/7117576/so-whats-better-than-a-reverse.aspx?source=itxsittb0000001

As he notes it's Canadian based which makes reading the filings a little harder, and in a different format. Canada is "better" about letting companies shuffle names, objectives, and shares to end up with an inflated market cap, but it still happens. Canada is quicker on the halts so beware if this really does have some book keeping that doesn't meet muster.

It's still OTC, minimal reporting, with recent name change causing the 5 letter ticker.

Data feed not updated, as Jed notes, market cap of less than $1M on some sites clearly outdated.

Needs the share's to free and it will "seek direction". Marijuana in the name is a little different than the usual Cannabis. Tweed Colored Marijuana might just take off.......

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Member Avatar jed71 (77.22) Submitted: 5/1/2014 1:26:29 PM : Underperform Start Price: $2.89 TWMJF Score: +27.67

So what’s better than a reverse merger cannabis company? Well a takeover / merger cannabis company out of Canada, of course!!

I had a difficult time finding information on this company since they are traded on the TSX and they have recently been added to the grey sheets in the US market. This is a low information stock for US investors unless you spend time looking at the Canadian equivalent of the SEC’s Edgar, which is named Sedar (www.sedar.com) The site is full of good information about Canadian companies, which I have used in the past, especially for small mining companies out Canada.

A little about the company :

“Tweed is a Canadian company established to supply an unmatched selection of premium medical marijuana to treat symptoms such as chronic pain, seizures, muscle spasms, nausea and loss of appetite.”

I visited their website and found some interesting information. They have recently purchased a 470,000 sq ft facility out of Smiths Falls, Ontario which used to be the old Hershey Chocolate Factory in Canada. The plant was apparently closed in 2008 and has not been operational since that time. I cannot imagine they would need a facility this large and it’s anyone’s guess how much work needs to go into this old plant to make it a viable option for a Marijuana grower. One thing I noticed that is conspicuously missing from their website – an investor page. I noticed a link back to Sedar for information, but there is no business plan, no forecasts of growth, no additional information for investors. I think this is a huge red flag as it seems like they should have much more focus on providing some detailed information to their investor base.

There is one filing with the SEC that I did look through. It was the Notice of Exempt Offering of Securities. There was $1.8MM offered in the US market on the grey sheets. The reason I bring this up is twofold; first, I expect the volume to drop off dramatically making it not selectable in Caps, and second, the low volume might cause some price fluctuations. Other than this single form, the company has not filed any documentation with the SEC.

“LW Capital Pool Inc. [the “Corporation”] was incorporated by articles of incorporation pursuant to the Canada Business Corporations Act on August 5, 2009 and is classified as a Capital Pool Corporation as defined in policy 2.4 [the “CPC Policy”] of the TSX Venture Exchange Inc. [the “TSXV”].

“On January 2, 2014 the Corporation announced that it has entered into a non-binding letter of intent (the “LOI”) with Tweed Inc. (“Tweed”) which outlines the general terms and conditions of a proposed transaction pursuant to which the Corporation proposes to acquire all of the issued and outstanding securities of Tweed in exchange for securities of the Corporation (the “Transaction”). The LOI was negotiated at arm's length and is effective as of January 2, 2014. On March 18 the Corporation and Tweed entered into a definitive agreement relating to the transaction which supersedes the LOI (the “Definitive Agreement”). I looked through their financial statements a little on Sedar and they are about what you would expect from a small company.”

So Capital Pool Inc. buys out Tweed and then they commence issuing shares. This looks a heck of a lot like a reverse merger in the US but I could not find information to substantiate. There have been recent press releases where they issued shares at $3.20 a share. But here is an interesting section :

“As of March 17, 2014, the Corporation has 7,260,000 common shares outstanding and has issued options to acquire an aggregate of 723,000 common shares at an exercise price of $0.10 per common share. Pursuant to the terms of the Definitive Agreement, the Corporation is required to complete a consolidation of its outstanding common shares on a 1 for 5 basis. Following such consolidation the current holders of common shares of the Corporation will hold 1,452,000 common shares and the Corporation will then issue a total of 32,042,612 common shares to the holders of the issued and outstanding shares of Tweed in exchange for all issued and outstanding shares of Tweed. In addition, it is expected that 2,980,054 post-consolidation common shares of the Corporation will be reserved for options and warrants issued to the holders of Tweed options and warrants and a further 144,600 post-consolidation common shares of the Corporation will be reserved for currently outstanding options of the Corporation. Following the Transaction, the current shareholders of Tweed are expected to hold approximately 95.64% of the outstanding common shares of the Corporation with the current shareholders of the Corporation holding the balance.”

So the old Capital Pool Inc. folks get 5% of the firm and the Tweed folks get 95%. Even after the reverse split and settlement, those folks with the options are getting a great deal ($.10 a share?!?!?!). Must be nice. As you can imagine, much of the control of the firm remains in the hands of the management team. Out of the recent Early Warning Reports,

“Following such acquisition, Mr. Rifici holds, directly or indirectly, or exercises control or direction over 7,774,053 common shares of the Issuer representing approximately 23.21% of the issued and outstanding common shares.” And further….. “Bruce Linton, acquired control, directly or indirectly, over 3,612,122 common shares of Tweed Marijuana Inc. (the “Issuer”), representing approximately 10.78% of the issued and outstanding shares of the Issuer.” And further, “The shares had a deemed value of $0.89 per share. The Issuer issued the shares in exchange for shares in the capital of Tweed Inc.”

So from $0.89 to about $3 a share. Again, it must be nice to do a merger / takeover and “create” that much additional value. The interim financials were last updated in January, as far as I can tell. Assets are very thin, there is almost no revenue history, and they had less than $500K in cash. But all of this was before the merger with Tweed, the purchase of the Hershey Park complex and the large share offering so things have most likely changed substantially. I would personally avoid this firm.

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