In the month of March, SK3 Group, Inc. (OTC:SKTO) has provided some enormous returns to traders who got in early. Cashing in on the medical marijuana boom, the company announced the acquisition of Medical Greens, who is said to be a provider of licensing, management, and logistic services for Medical Marijuana collectives throughout California. Their website, which was launched just last month doesn't explain the services the company offers, but amazingly they secured over $30 million in contracts right after being acquired by SK3, which was announced on March 11th.
On March 13th, the company announced a new chairman, Kevin Allyn, formerly of King World Productions. Then on March 26th, high profile attorney, Jeff Benz, who was once Chief Ethics Officer for the United States Olympic Committee was announced as General Counsel and Executive Vice President of Business, Legal, and Government Affairs. Impressive for a non-reporting pink sheets stock, to say the least.
Will this run continue for SKTO? Can these high profile names help sustain these tremendous gains? After all, SKTO hasn't provided any financial information in 2 years. Are big names all that are needed or will transparency from the company be required for the run up to continue?
Medbox, Inc. (MDBX), another medical marijuana player who saw it's stock soar from $4 to over $200 in just 3 days a few months ago told investors in January that they would become SEC filers in the first quarter of this year. To date MDBX has not kept it's word, which is typical of many pink sheets companies.
Pink sheets stocks are often hyped so insiders can dump shares to novice investors who lack the knowledge to understand how these schemes work. When the dust settles these non-filers ride off into the sunset with the novice investors money never to be heard from again. That is until they have a new business idea. Which is what SKTO now has, a new focus for the company, medical marijuana.
When SKTO last filed financial information with the OTC, they said they had acquired several healthcare related companies valued around $11 million. They bought these companies with deeply discounted shares. This was all part of a new business plan that had been previously announced.
At the same time they released the 2010 annual report, SKTO was also telling investors they were going to become SEC filers. 2011 was going to be an exciting year according to SKTO. That was the last time SKTO provided any financial information to the investing public. For nearly 2 years SKTO has provided no information about those 2011 acquisitions, and like many pink sheets pumps and dumps, they have a new business focus, again.
Perhaps the newly assembled SKTO Dream Team, as they are being called, will do the ethical thing for it's stock holders and be transparent. It would be refreshing to see. For now OTC Markets has it right. Buyer Beware. At least until the company becomes transparent.
SKTO has a questionable history, as do many pink sheets stocks. Will that history repeat itself? One has to wonder with the tremendous volume we saw in March.
Just a reminder, Monday is April Fool's Day and SKTO is a non-reporting pink sheets stock. The company has announced a new direction and acquisitions before.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.