GEO Investing

Fusion Pharm (OOTC:FSPM) was organized to capitalize on opportunities present in the rapidly growing vertical farming and cannabis industries. Yesterday, when the stock was trading around $0.75, we posted this note on our message board:

Our email note from 2/20/2013:

“On 10/21/2011 we added Fusion Pharm (OOTC:FSPM) to our Speculative Screen with the following note:

“Flat chart. Watch to see if this company attracts “hype” as the plight to legalize marijuana moves forward. Looks like a start-up company with no real operations. Website is still underdeveloped.”

The stock did not perform well since being added to our screen (fallen from $2.75 to sub $1.00), but now that hype in the marijuana industry is back in favor we are once again putting FSPM back on our watch list. For the nine months ended September 2012 the company reported revenues of $750 thousand vs $132 thousand in the prior year period and net income of $417 thousand or $0.15 per share vs a loss in the prior year.

To our knowledge it is the only cannabis stock generating revenues and net income. The company will need to raise money to fully execute its business plan and it should be noted that the company did not generate any revenues in the third quarter.

We have only performed minimal due diligence in this name.”

We were never able to speak with management, and since we felt growth would be dependent on a capital raise, we were not actively tracking the stock. However, recent developments have put FSPM back on our radar.

The company has recently announced large orders and expansion of its production capacity. In a 9/25/2013 press release management stated:

“The new sales center will greatly enhance our sales staff’s ability to show our product variety and capabilities and we expect our sales to see significant increases in the next 6 months”, commented FusionPharm CEO Scott Dittman. “We were absolutely bursting at the seams in our existing facility. The new facility will not only improve our productivity and efficiency, but will allow us to keep up with our pending sales pipeline”

The whole marijuana sector has been hot of late as the legalization of marijuana in Colorado has given many stocks a nice lift. Advanced Cannabis Solutions In (OTCCB:CANN) and Cannavest Corp (OTCCB:CANV) have both risen over 100% in the last month alone. FSPM has also risen over 100% with shares rising from the $0.30 level to current prices of around $0.75. With the current momentum in the marijuana space, and with Washington and Massachusetts slated to possibly legalize marijuana in 2014, we are willing to take a speculative-hype bet on shares of FSPM. Please be advised we can not comment on the legitimacy of FSPM operations and are unaware if the company has already raised the necessary capital to fund its near-term growth.

Since our post, shares of FSPM rocketed to a high of $2.00 and CANN continued its strength, rising another $3.00 to hit $10.00 per share.

For investors interested in this space, here are all the stocks that we have tracked during the last few years. Please be advised that we have not performed proper due diligence on any of them and many will likely be pump and dump candidates or targets of short thesis articles. CANN, CANV, FSPM, Medbox (OOTC:MDBX), Sk 3 Group (OOTC:SKTO), Sealand Natural Resources Inc (OTCCB:SLNR), Neutra Corp Common (OOTC:NTRR), Mediswipe (OOTC:MWIPD), Medical Marijuana (OOTC:MJNA), Latteno Food (OOTC:LATF), Hemp (OOTC:HEMP), Tranzbyte (OOTC:ERBB)

We will start to perform valuation scenarios on the above.  At first glance it looks like FSPM has the closest capital structure resemblance (low float) to MDBX, which saw its shares run from $2.00 to $200 in a matter of days in late 2012.