Seeking Alpha
, Super-Trades (344 clicks)
Long/short equity, deep value, value, special situations
Profile| Send Message|
( followers)  

Summary

  • The Marijuana sector has been one of the strongest for small cap stocks in 2014.
  • SXLP is a new marijuana company per their recent SEC filings.
  • Because of the strong interest in the sector, SXLP is a stock to watch as more details are revealed.

Signature Exploration and Production Corp. (SXLP) was a shell of a company (that wanted to get involved in oil and gas but never did) with 850,110 shares outstanding (see common stock in equity section filed February 10, 2014). Prior to March 13, 2014, the company was controlled by Mr. Steven Weldon and Screaming Reach Investments LLC by virtue of a combined 52% ownership of the common shares of the company (see 5.01). That means the public traded float was 48% of 850,110 or 408,053 shares.

On March 13, 2014, SXLP entered into a definitive agreement with Mr. Craig Ellins for the acquisition of assets to be used in the legal production and use of cannabis. Currently, there are approximately twenty-one states plus the District of Columbia that have laws and/or regulations that recognize in one form or another legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment. Other states are considering similar legislation. The assets equip the company to be among the first to provide methods of cannabis production for the legal uses that are being legislated in the various states. The assets include:

  • a provisional patent application associated with the production or use of cannabis;
  • concepts associated with the production, use of, or in any way connected with cannabis conceived or developed by Mr. Ellins or his associates;
  • trademarks;
  • business plans;
  • investor presentations and histories;
  • websites;
  • trade secrets including without limitation trade secrets involving nutrient mixes;
  • drawings and digital artwork;
  • research analysis and reports, including without limitation a report entitled "GrowOpp Hydroponic Agriculture;
  • raw materials associated with the production and use of cannabis;
  • production equipment and related assets including without limitation electrical equipment, plastic molds and internal parts;
  • proof-of-concept equipment; and
  • URL's associated with or intended to be associated with the production, use of, or in any way connected with cannabis.

In exchange for the assets, the company agreed to issue 12,500,000 restricted shares of the company's common stock. Of the total number of shares to be issued, 4,500,000 were issued upon the signing of the agreement. The remainder of the shares will be issued upon reaching certain milestones.

In connection with the transaction, Craig Ellins gained control of SXLP by virtue of his stock ownership in the company. As stated, Mr. Ellins acquired 4,500,000 shares of common stock on March 13, 2014, in exchange for the assets described above. The share acquisition gave Mr. Ellins control of the company by virtue of holding approximately 84% of its the voting capital. Mr. Ellins will become the chairman and CEO of the company. Mr. Steven Weldon resigned as the chief executive officer of the company. Mr. Weldon will continue to serve as the chief financial officer of the company.

Mr. Ellins has a varied and impressive business background. He has spent more than 30 years discovering emerging trends and creating start-ups, from being a pioneer in companies offering 24-hour live shopping networks, to developing one of the Internet's first streaming video business opportunities. He has launched new products via domestic and international television direct response advertising, including the successful Pilates Performer, BioFlex, Nature's Vision and the Voit Ab Roller. Ellins has been sought out for strategic planning by well-known companies, including NetCom, AT&T (NYSE:T), Time Warner Inc. (NYSE:TWC), K-Tel International (OTCPK:KTLI), Fingerhut Corporation, Guthy-Renker, Simitar Entertainment, and Stamina Products. Most recently, Mr. Ellins has been developing technology and trade secrets central to the production of cannabis of the variety and type that will support the legal purposes of cannabis that now exist in various states.

It also appears Mr. Ellins was a member of the Board of Directors in the marijuana company GrowLife Inc. (OTC:PHOT), which has a market cap of $358 million.

The new website reveals that the company is called GrowBlox Sciences Inc.

Here are some highlights from the website:

(click to enlarge)

(click to enlarge)

(click to enlarge)

(click to enlarge)

(click to enlarge)

Valuation

SXLP now has approximately 5.3 million shares outstanding with a float of approximately 400,000. (As certain milestones are reached, Mr. Ellins may receive another 7.5 million shares but they are yet to be issued).

As we look to other marijuana stocks:

GrowLife Inc. has a market cap of $358 million. For the nine months ended September 30, 2013 PHOT had approximately $3 million in revenues. For SXLP to have that market cap with 5.3 million shares outstanding, that would be a stock price of $67.55 with 5.3 million shares outstanding and $27.97 if certain milestones were reached and they had 12.8 million shares outstanding.

CannaVEST Corp. (OTCQB:CANV) has a market cap of $669 million. For the nine months ended September 30, 2013 CANV had approximately $1.3 million in revenues. For SXLP to have that market cap with 5.3 million shares outstanding, that would be a stock price of $122.23 with 5.3 million shares outstanding and $52.27 if certain milestones were reached and they had 12.8 million shares outstanding.

Medical Marijuana, Inc. (OTCPK:MJNA) has a market cap of $294 million. For the nine months ended September 30, 2013 CANV had approximately $1.3 million in revenues. For SXLP to have that market cap with 5.3 million shares outstanding, that would be a stock price of $55.47 with 5.3 million shares outstanding and $22.97 if certain milestones were reached and they had 12.8 million shares outstanding.

Advanced Cannabis Solutions, Inc. (OTC:CANN) has a market cap of $327 million. For the nine months ended September 30, 2013 CANV had approximately $455 in revenues. For SXLP to have that market cap with 5.3 million shares outstanding, that would be a stock price of $61.70 with 5.3 million shares outstanding and $25.55 if certain milestones were reached and they had 12.8 million shares outstanding.

As more information becomes available about SXLP, this may be a stock to watch if the sector continues to grow.

Risks

OTC stocks are risky and thinly traded. The SXLP history is not known in great detail beyond their new website (like most of these marijuana stocks).

I am releasing this article at 8:15 am EST Tuesday March 25, 2014 on my blog at super-trades.com and to my subscription newsletter service on profit.ly at 8:15 am EST on Tuesday March 25, 2014.

Editor's Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Source: Signature Exploration And Production Corp. Is The Newest Marijuana Stock