Friday, November 18, 2016 8:25:37 AM
Feedback from Cannabis Analyst:
This is what Alan Brochstein doesn't want you, future reader, to see. In this cached link, he refers to this book burning as "spam." You can decide for yourself.
http://webcache.googleusercontent.com/search?q=cache:sHRrWP8G4A4J:seekingalpha.com/instablog/6880-alan-brochstein-cfa/4902878-10-reasons-extreme-caution-cannagrow-holdings-otc-cgrw+&cd=1&hl=en&ct=clnk&gl=us
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**DELETED CONVERSATION** below. HLIX TCS was trading at 80 cents when this conversation began in September of 2016.
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MichaelRrrrrr
Very good analysis, Alan. I know you and I got off on the wrong foot. This looks like the typical capital structure intended to fleece investors.
I ended up on your page only because this company issued a press release today, mentioning my company:
http://bit.ly/2cEoBpU
They don't list my ticker symbol. However, they state (released 45 minutes ago from the time of this writing):
"CannaGrow Holdings., has been granted access to Cannabase, the largest wholesale marketplace for Colorado's Licensed Marijuana Cultivators & Retailers..."
HLIX bought Cannabase a few months ago. This is the company I asked you to look at and you berated it as not filing with the SEC. Can I ask you respectfully to look again. This stock is not being pumped. I am asking you because despite our differences, I respect the analysis of the capital structure on Cannagrow you just gave.
HLIX does report with the otc markets. As a micro cap company, I would argue that it is more prudent to file this way. It's a big savings for the stage they are at. They have filed form Ds with the SEC. A direct link to their filings are here:
http://bit.ly/2cn0zCg
Can you go in as a devil's advocate and rip me apart and tell me why it's a horrible investment? I said that because I feel that this one is legit. Prove me wrong, please. I would like honest analysis.
My interpretation of their latest quarter is highlighted in yellow here. I invite your discussion. Healthy debate! I really believe this one is different if you would just dive into the facts with me and interpret them with me. As my enemy, as my nemesis, as a colleague, whichever you prefer.
http://bit.ly/29DAvjQ
8 Sep, 08:19 AM Reply 0
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MichaelRrrrrr
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Interesting: You like AMMJ and added it to your portfolio. They have twice the number of shares of HLIX. For the latest quarter, they had virtually the same amount of sales as HLIX, yet they have been around longer. HLIX has a much higher run rate and lost a lot less money on the same sales.
Seems to me if you like AMMJ, you should love HLIX.
10 Sep, 02:57 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Sorry, but I run a subscription service and won't discuss my views on valuation of companies outside of 420 Investor. AMMJ trades at about a $5mm market cap, by the way. I am not sure why you say I like it or "added it to my portfolio" - where is your source of this? It is public information that I sold the position in one model portfolio on Thursday at $0.15.
HLIX, which DOESN'T FILE WITH THE SEC, had 27mm shares roughly as of 6/30, though this doesn't include shares issued for the Cannabase deal, for which no terms were disclosed. So, at $0.80, the market cap is likely higher than $22mm. HLIX also has a weapon of shareholder destruction, 1mm preferred shares that add 60% to the common shares outstanding, whatever they are. This is incredibly unfriendly to common shareholders. So, this pushes it to $35mm. Again, these numbers would be boosted by any shares awarded for Cannabase deal.
Let me add that I have no respect for a company that announces a deal and doesn't disclose the terms or give a sense of the financials of the company it is acquiring, unless it isn't material, in which case they should acknowledge the immateriality. This is the stuff of silly penny stocks and not real companies.
I refuse to have any interest in HLIX as long as they don't file with the SEC. The financial statements are inadequate in my view - impossible to tell what the liabilities of the company might be. No real investor would touch it with a ten-foot pole given its lack of disclosure.
Good luck...
10 Sep, 05:27 PM Reply 0
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MichaelRrrrrr
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Fair enough, Alan. Thanks for taking the time to reply in a professional manner.
The terms of the deal, however, are disclosed in the recent filings. It was purchased for $400,000 cash plus 2.3 million shares of stock (valued at .20 per share), giving it total valuation of $800,000. These shares were not issued for its purchase. They came out of treasury stock. Therefore, there was no dilution on the deal. You can verify that by the share count post-deal and pre-deal.
The preferred shares are held by the company. This would ensure the company can retain control without losing control on future deals. Fully diluted at 35 million is not that many shares.
I do agree that the market cap is high now. It wasn't when I first brought it to your attention. It went up because of this non-dilutive deal and the extreme growth rate the company experiencing.
The otcmarkets have come a long way since 2008 in transparency. Still far from the SEC. They are in a bad neighborhood. I concur.
I agree that all of your reasons are valid reasons to not want to look further and shun the company. They do need to file with the SEC to gain respect. At this stage, I think it's prudent that they not go to that expense. The company has never been pitched to retail investors and no capital was ever raised that way through any kind of "pump and dump" press release.
Helix has a long way to go before they can gain your respect, and ifff/when they get to that point, I don't think they will have a $22 million market cap with a run rate that will get them to $2 million at the end of this fiscal year. It is definitely a frontier market at this time, the Wild Wild West.
Thanks again for your time. I will check in on you within the next 2 or 3 years one way or another with a verdict.
11 Sep, 01:05 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Thanks - I should have checked my notes better, as I saw a disclosure of $349K cash (not $400K). This isn't stated but I see now the 2.3mm shares too - they say this (without specifying):
"Business Assets were acquired for 2,320,000 shares ($0.20 per share)"
and
"Sec 4(a)2 for acquisition of assets of Revolutionary Software LLC – 2,320,000 (April 2016) "
Is "Revolutionary Software" = Cannabase??? It seems so.
Checking my notes, I see that this company has been handing out shares to paid promoters like Halloween candy:
"In April 2016, the Company issued 200,000 restricted common shares to Uptick Capital for fundraising assistance. In April 2016, the Company issued 75,000 restricted common shares to Odeon Capital Group and 75,000 restricted common shares to related party." There are some other disclosures of even more shares awarded for "financial consulting services", but I didn't see them detailed.
Like I said, until they remove the red flag of not filing with the SEC, I don't intend to take them seriously. Hopefully Venegas will realize that he looks like a scammer even if he is not.
The market cap is not $22mm. As you agreed, the convertible preferred increases the market cap by 60%. The market cap is $35mm. For a company that has equity of less than $400K and burns cash in its operations, this requires substantial growth to come close to justifying. I expect more dilution here - already many shares have been added this year.
11 Sep, 02:29 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » I just reviewed the terms more closely and need to make a correction regarding the convertible preferred. It converts to 60% of the common shares outstanding AFTER conversion. So, the market cap isn't $22mm at $0.80 but rather $55mm. Ouch...
11 Sep, 03:45 PM Reply 0
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MichaelRrrrrr
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Perhaps you can tell me who owns the preferred. My understanding is the company, but that is where I get lost. This post here:
http://bit.ly/2cwjV7U
Those shares are actually listed as "anti-dilutive" in the latest filing. I think the company owns those shares as protection against lose control to my understanding, but that would align their interests with mine. Dilution down the line is fine, as long as it's accretive.
This was all issued as part of the "reverse merger" in October of last year. The company has done a lot and come a long way since then, and only created shareholder value since that time. Me, being the only retail investors there is to my knowledge. I'm all alone.
11 Sep, 03:56 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Venegas
11 Sep, 04:22 PM Reply 0
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MichaelRrrrrr
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That's what I thought, that Venegas owns the preferred. I can't understand the legalese of it. That actually makes me feel a lot better.
So, Venegas has a long reputable history, which I touch upon in my posts. I can't find dirt on him no matter how hard I try, and I know that's important to you as your analysis in Cannagrow shows.
Venegas is the founder and CEO of this company, one of two directors, and currently the acting CFO. That's a lot of consolidated salaries. That means his interests are definitely aligned with mine. I see that is a good thing so he is ensured to have 51% control of the company.
He also has the owners of Cannabase, which are two techies from a private company, who have those 2 million shares and vested interests. I'm sure they didn't go into this deal without it being vetted by a good money manager.
Correct me if I'm wrong, but I do see this as an alignment of interests.
11 Sep, 04:31 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » One can have control without something as outrageous as an automatic 60% of the company - this is almost as bad as the company not filing with the SEC.
11 Sep, 06:55 PM Reply 0
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MichaelRrrrrr
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There is a source that gives it some merit here:
http://bit.ly/2cxuTKk
Retain control: Supervoting Stock
What it is: “Supervoting stock” allows founders to maintain control as stockholders throughout the life of the company, even as their ownership is diluted. To implement supervoting stock, the company will typically establish two classes of common stock, Class A and Class B. Class A common stock will carry multiple votes (usually 10-20, sometimes more) per share on all matters in which shareholders are required to vote, as compared to Class B which will carry one vote per share. Founders will be the sole owners of the Class A supervoting stock, and Class B common stock will be reserved for issuance under the company’s option plan to the rank and file. Setting up supervoting will ensure that founders will be able to retain a greater level of control over their company over a longer period of time.
----------------------...
NOW I understand the issuance of the two class of shares at inception of the "reverse merger." It was my suspicion, but you confirmed it. And then this source, as I try to defend it, validates it.
But it's not friendly to me. I get that. It's not in Venegas's best interests to dilute his investors, which are sophisticated/accredited investors at this stage. And, yeah, he needs to prove himself to be Mark Zuckerberg to justify this.
I suspect he is working on Series B funding at this time. These are the serious investors in my eyes. They take more risk than Series C, which iseems to be more your style. They are going to look at all of that, as well as projections, Cannabase's current sales backed out, etc., if Venegas wants the funding he apparently seems he is worth. I will gauge what, if anything he gets, with what MJ Freeway received, as well as Tradiv, and weigh that on a qualitative and quantitative basis. It will be an endorsement and/or a strike against those preferred.
It will be a learning experience, regardless. It is an adventure.
But, yes, I'll give you two legitimate RED FLAGS here: One, the preferred; and two, Uptick Capital. I'm not particularly pleased with either one, but both are in alignment with my interests at this time.
12 Sep, 03:12 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Serious investors won't touch this. It doesn't file with the SEC and the valuation is insane.
I don't know Zachary at all. On paper, he seems like a well qualified guy, but what he has done here (reverse-merger, no SEC filing, onerous convertible preferred) really looks stupid at best. Why didn't he just build his company? What was the rush to go public with all these issues?
12 Sep, 07:35 AM Reply 0
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MichaelRrrrrr
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The reverse merger was always a puzzle to me. I was in that empty shell waiting for somebody to come buy me. I'm a stowaway in Helix. I bought a million shares at a fraction of a penny, and I was revere splitted down to 9,000 shares (rounding off). But it's been a great investment for me. And a great adventure.
But all this time, I've been waiting for a "pump" that never happened. And that's why I say this is something different. They have an old investor's presentation made at the same time of this reverse merger. It talks about plans to go "public" in the future as an exit strategy for investors. But as they talk about the "future," I'm sitting there as a stowaway thinking, we already went public. What are they talking about?
So, long story short, I think this is their "exit" vehicle for venture capital. It's just not a future IPO. But it's also not a vehicle they are pumping. In fact, virtually all shares are restricted. The float is really low, under 500,000 shares. But that wont' last long. In two more months, a full year will have passed. But still, not all will be available. Cannabase's purchase are restricted shares, for a full year minimimum according to the 1933 act to my understanding.
I think it's a vehicle on the side, intended for future use. Rather tan the MJ Freeway plan, which seems to be an IPO down the line. Or will they just do a reverse merger too? All venture capital in Helix is restricted at this time.
For all startups, all investors want an exit strategy. Maybe it's being sold in the future to another company, or it's to go public. But they do need an exit. So, yes, this is a very unorthodox way of going about it. I have been perplexed about it. Not the kind of ship I expected to pick me up.
In that presentation made last year, they DO talk about building the company up "first." This is the process of the "first." The SEC filing is really a bad idea at this time ifyou ask me. On that part, he is right. That is a huge expense, and they don't have the money to be distracted with that. That does need to come later if they plan to do this correctly.
You would be one of those "later" investors, IFFFF they can gain your respect. Buy higher later, as Ted said. That's fine too IFFFF it works out. Startups are risky. I'm just saying that this one is different in that it's not acting like a scam. Yes, there are some red flags. But we shall see.
I was going to sell in the Summer, but they had me at Cannabase. Maybe I'm naïve, but Jennifer, the founder of Cannabase, and her husband, are very interesting to listen to. I know a BSer when I hear one, and she is legit. Maybe she has been duped, but I don't think so.
12 Sep, 08:19 AM Reply 0
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MichaelRrrrrr
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Yes, you are correct. Revolutionary Software is Cannabase. It was not clear to me either. I had to go look it up elsewhere.
I agree about the shares in Uptick being seedy, which I note here:
http://bit.ly/2cOq3Gx
Odeon Capital, however, is not a promoter. I don't know what the shares were issued for, but they are a very legit group as you can see here. Virtually all shared issues have been private placement for venture capital.
http://bit.ly/2cwl5Ag
It is a startup company which is expected to lose money at this stage. This is the seed capital of a series of funding rounds, which is expected for this type of aggressive growth. For angel investors. But, yes, it's hard to make a value case right now. It was easy when the stock was at 10 cents, for the longest time. I jumped into this empty shell at a fraction of a penny, originally.
I just now ran across this article you wrote. This is an interesting read you penned:
http://bit.ly/2cOpMDB
That is the article on Massroots you wrote just recently. That is what Cannabase is to my understanding, which Helix just bought. Cannabase is a small player on the national level. But in Colorado, they have 72% of the market share. Leafly and Weedmaps are their two elephants out there, bringing in over $30 million in revenue between the both of them? By conservative estimates, would you agree?
This company you profile, Mass Roots, DOES file with the SEC. They have 45 million non-diluted shares compared to Helix's 35 million fully diluted. They also have less sales than Helix last quarter, and none of Cannabase's sales are even reflected in that quarter.
I think there is something here, Alan. Like you, I don't like the penny stocks. I bought into this empty shell expecting it to be pumped after somebody eventually came along to buy it. But following the story day by day, it's never been pumped. Not yet, at least. Uptick, I agree, is a disappointment to see. But, a startup does need exposure. I know, I know. That is the clarion call they all say. A true statement that is always abused and loses credibility.
I disclose everything. Those shares are still restricted though, and the company hasn't been profiled yet by Uptick's subsidiary.
11 Sep, 03:53 PM Reply 0
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MichaelRrrrrr
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I don't understand what you mean by "after conversion" The conversion is 60% of OS as I understand it. The OS is also actually 27M, not 22 (rounding up). So a 60% conversion would bump it up to 44M (rounding up).
But, again, the company's interests here are in alignment with shareholders, right? I mean, who owns the preferred? From what I can tell, it's the company itself.
11 Sep, 04:16 PM Reply 0
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MichaelRrrrrr
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Oh, you said market cap, not OS. Sorry. Got it...
11 Sep, 04:17 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » The numbers bounce around here. This is from the subsequent events in the audited annual financials: http://bit.ly/2cOuC3C
"In April 2016, the Company acquired all of the assets of Revolutionary Software, LLC for $300,000 cash and 2,320,000 restricted common shares."
It is at odds with the Q2 financials, which say $349K cash. Maybe something changed between the filing of the audited annual financials, which was AFTER the Q2 report: http://bit.ly/2cwnhYK
You should research Cannabase - it doesn't have "market share" of 72%. Tradiv is much bigger by the way.
11 Sep, 04:27 PM Reply 0
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MichaelRrrrrr
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I really appreciate all this, Alan. You have been a huge help. You filled in some blanks for me. I appreciate you, despite our differences.
I didn't notice that discrepancy. There is actually a $50,000 "investment" in Cannabase from the Q1 report, which I never understood. So I actually arrived at $400,000 cash by adding those two numbers. But like you say, that's ad odds with $300,000. I don't understand.
In any event, thanks for bringing Tradiv to my attention. This is very interesting about them. This is another "weedmaps" or "Leafly" which seems to legitimize the Cannabase business model.
http://on.inc.com/2cwxYuv
Although, Cannabase has more competition than I realized.
" Tradiv has raised $3.4 million in venture capital from Anslinger Capital, CanopyBoulder,."
Still, I can't find a source that specifically pins down market share for Tradiv, or anyone, for that matter. I am extrapolating Cannabase's market share from this statement in their PRs:
"Cannabase’s suite of seed-to-sale marketing tools are utilized by over 72% of the cultivators, infused product manufacturers, and retailers in Colorado’s licensed cannabis industry."
One Source: http://bit.ly/2cOH0Rc
BTW, right after the purchase of Cannabase, Cannabase forged two partnerships with BiotrackTCH and MJ Freeway. MJ Freeway is the fastest growing company in the cannibus industry to my understanding. Perhaps you are familiar with these two? MJ Freeway, btw, has plans to go public in the future. Both have been vetted by venture capital, which to me is a strong endorsement for Helix TCS.
Tradiv, as I'm learning, didn't come to Colorado (Boulder) until November of last year (the time Helix did its reverse merger). Cannabase already had a big headstart on them. Although, the response to Tradiv has been fantastic, which can only bode well for Cannabase too, as I understand it. Cannabase didn't have access to capital like Tradiv, but now that they have Venegas, I think that changes the equation. Plus, Tradiv did a partnership with Blueline Protection Group, which is your typical penny stock fleecing story. Helix employes many disgruntled Blue Line employees now, and rather than a partnership with a Tradiv, Helix flat out bought Cannabase.
This is actually making me feel even better about Helix's pursued strategy.
You should contact Venegas and try to get an interview for your newsletter. At the very least, it would have to be an interesting story he has to say. You have nothing to lose but an interesting read and/or some pearls of wisdom.
11 Sep, 06:07 PM Reply 0
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MichaelRrrrrr
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In fact, push Venegas for why he issued shares to Uptick Capital in your interview. Ask him tough questions. What a great article for 420 Investor. His main competitor is BLPG, and they are in a #$#@ hole! They have been bailed out by Hypur, which also funded your Tradiv, btw. So now I see the connection to Hypur, Tradiv, and Blue Line. Which is a similar model to Helix and Cannabase, yet Helix didn't need a bailout and didn't destroy shareholder value.
Incorporate all of that, and you have one heck of an interesting story.
11 Sep, 06:08 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » My Tradiv? Lol. Where did you see that Hypur invested in Tradiv?
11 Sep, 06:57 PM Reply 0
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MichaelRrrrrr
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I'm wrong. Just skimming, trying absorb a lot of info. This source alleges that Hypur and Tradiv are "in the process of partnering" as of January, 2016.
http://on.inc.com/2cwxYuv
11 Sep, 10:58 PM Reply 0
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MichaelRrrrrr
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This is also interesting about Tradiv, Alan. Now that I actually have time to read the article I skimmed, it's very interesting:
"Tradiv's couriers--it works with Green Parcel Service and Blue Line Protection Group, though it's hoping to develop its own transportation service--will pick up the order and drop it off in one to three days."
So, Tradiv just unknowingly endorsed Helix's strategy. Cannabase has its own transportation service now -- Helix. A vertical integration. Cannabase needs to be really aggressive. When I read articles from California, it's Cannabase they usually refer to, so Tradiv has been off my radar.
BTW, as a side note, I tried to you at I-hub on this CannaGrowth site. I actually couldn't find anything good to say about Cannagrowth. The moderators deleted me (censorship) within one minute. On three occasions. I don't understand why they let you post and not me. Do you have some kind of grandfathered super-power clause on I-hub?
I've been censored on other boards too. Only Seeking Alpha is legit. But I-hug has its use, such as my personal diary and log of Helix, documenting my ongoing adventure.
12 Sep, 08:27 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » You have to learn to play by the I-Hub rules. Read them and learn them. You can always protest deletions that aren't proper, but know the rules. For instance, you can't mention HLIX on CGRW, like you did if I recall.
12 Sep, 08:44 AM Reply 0
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MichaelRrrrrr
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I said "you," but a lot of that is from a cut & paste, comparing HLIX to MSRT on the MSRT board, Alan. The cocky attitude isn't really directed to you. It's just easier to cut & paste and ask, why?? This has to be an example where, all things considered, the company reporting to the SEC does not make it a better investment.
13 Sep, 02:16 AM Reply 0
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MichaelRrrrrr
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I don't have time to read rules, Alan. I'm used to be the exception to the rule. ;)
Alan, I'm having a real problem with this article you drafted here:
http://bit.ly/2cTClxh
They report to the SEC, but that is the ONLY advantage they have over HLIX that I can see. Given all that extra transparency, it's clear HLIX is the better value. And for HLIX to report to the SEC is just not prudent at this time. It would serve only to widen losses. I personally have enough transparency to make an informed decision. But I don't have to follow rules either. My hands are not tied by regulation. That will have to be the end game, and I understand that.
Here is my analysis of MSRT as compared to HLIX:
MSRT similar to Tradiv, Weedmaps, Leafly, and Cannabase. Even Aurora just introduced an app for medical marijuana only.
To begin with, Helix TCS (the new owner of Cannabase) has financials that do NOT reflect the sales of Cannabase yet. That will be seen next quarter. However, they are the transport business. This is vertical integration, So Cannabase has what MSRT has, but with the addition of transport and security to offer. Which is what Tradiv admits it wishes it has, but doesn't offer yet.
1) MSRT is already starting out with 60 million shares fully diluted, plus the 10M new issus with convertibles, putting you at 80 million shares fully diluted. Granted, 10M are out of the money, so I'll go with 70 million to keep it simple.
Helix TCS (HLIX) has you beat at 50 million.
2) HLIX has 83,000 in cash last quarter, you have 53,000.
3) Helix has strong working capital, MSRT has negative working capital, making it insolvent without the dilutive cash infusion coming your way.
4) MSRT has negative shareholders equity, HLIX has a book value of $350,000.
5) MSRT has year-to-date sales (6 months) of $600,000. HLIX $870,000, and Cannabase isn't even reflected in that figure yet.
6) MSRT lost $2.1 million YTD; HLIX lost $500,000 YTD.
With Cannabase's integration, they get to share in HLIX's fixed costs. MSRT has liquidity in its stock as the only advantage, but that's only short sighted. And with seedy Uptick involved, that's sure to change. If MSRP can trade at its market cap, what's to stop HLIX from trading at that price or higher? According to perfect market theory, nothing. But I'm pretty sure you know, as well as I do, the market is not perfect. So, we shall see...
But in the end, we do need at LEAST $10 million in sales to make a value case for HLIX's current market cap. I'll be very interested to see what Cannabase brings to the table. I can safely say with extreme confidence that HLIX is on track to exceed $2M in sales this fiscal year.
13 Sep, 03:54 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Good luck. Sounds like you should join 420 Investor!
13 Sep, 08:47 AM Reply 0
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MichaelRrrrrr
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So far the moderators on MSRT at I-Hub are not following the rules, allowing me to speak. That's how I am.
I brought this to their attention too, Alan:
"MassRoots has 24 full-time employees working out of headquarters in downtown Denver, Colorado. The majority of these employees are engineers and designers focused on developing new features for the MassRoots platform. We believe that over the long run, a small, talented and close knit team of A will outperform larger teams of B and C."
That's interesting. Cannabase has just 3, and two of those the husband/wife founders. I don't think you can get smaller and close knit than that. That explains some of their wide losses. Of course, reporting to the SEC isn't cheap either. And at their stage, I'd argue not very prudent either.
13 Sep, 07:38 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » I apologize, but I don't have the time or interest to help you with I-Hub or to discuss your every post in every forum.
13 Sep, 08:48 AM Reply 0
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MichaelRrrrrr
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You don't have respond, Alan. I know you're busy. I just listened to your full interview here:
http://tinyurl.com/hnm...
Very interesting. Good to put a voice to the name. The CFA is impressive. All good points. I can't make a value case on HLIX based on the last quarter.
I just want to address something you said above:
"I don't know Zachary at all. On paper, he seems like a well qualified guy, but what he has done here (reverse-merger, no SEC filing, onerous convertible preferred) really looks stupid at best"
I have found third-party articles that corroborate his background. For decades, he has invested in frontier markets. Undeveloped countries, with a heavy focus in Africa. That would be unregulated markets, and a very contrarian philosophy. He also has a strong background in the security firms, which is right up Helix's alley. This would be consistent with his MO, going public in a "frontier market" of sorts.
I think we are going to see extreme volatility, but I don't want to make a case for value. I want this company to show profits, and I want us both to learn something from this. I think you will be surprised in five years of what Zac will make of this company. I'm a good profiler people. The finances here are not bad. What you would pay for it is an entirely different issue.
24 Sep, 03:04 PM Reply 0
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MichaelRrrrrr
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NO NEED TO RESPOND:
I also forgot to add that I enjoyed your MassRoots commentary in that link above. I like your consistent valuation in that you are not a shareholder, but following the company. Interesting commentary the S1 and how they went public. You are profiling, and I can't blame you. If I saw a man wearing a dark suit with a club in his hand, looking exactly like the man who always beats me up in some dark alley after luring me into his presence, I'd stay away from him too.
You like the advertising potential of MassRoots. I know you don't think Cannabase is the market leader, but I still can't find any contradictory evidence to show they aren't. They claim they are, and they have 72% of the licensed wholesalers in Colorado as their clientele. there may be a lot of cross polination there, but that is a lot of exposure.
So they have the same advertising potential. This is how they generate income too. But unlike Massroots, they can actually match wholesalers to buyers, and they take a cut. MassRoots claims its working on making that happen for them as well, which is an endorsement to Cannabase's current business model.
This dark figure in the OTC suit, however, doesn't have the high expense and SEC regulatory constraints of MassRoots. And HLIX, as mentioned above, has more sales and loses less money alone. Cannabase's figures are already backed out of the latest report, but won't be next month. The quarter ends in a few days, and a lot of truth is going to come to light.
24 Sep, 03:38 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » The deal closed in April - why is it that you think the Q2 results excluded Cannabase?
24 Sep, 10:21 PM Reply 0
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MichaelRrrrrr
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That throws me for a loop. I apologize. That's why I like analyst input and someone checking my work. I didn't look at that date close enough. I thought it came on the back end because the PR didn't come out until July. Then I don't know why they waited so long to announce it.
Two partnerships with MJ Freeway and BioTrack came a week later in July, so I'll go with those two being closed in July. Those are two private companies that have both been vetted by venture capital to the tune of more than $7 million each. That's a good endorsement to me, especially considering the fact that they two are competitors yet both found solice in Cannabase. Not Massroots, but Cannabase. And both are fighting each other over government contracts in Puerto Rico. Actually, KIND (also private) is also battling BIOTrack's government win in Puerto Rico. There are a lot of qualitative variables here.
Were it not for that purchase of Cannabase, Helix actually would have ended the quarter with more cash than it started with. But, that also wouldn't have been prudent to sit on seed capital like that since the ratio of working capital would be too high for investment purposes. And still, working capital is good. But sad to say, now I'm confused about what is Cannabase and what is Helix. I want them separated out. I still think next quarter is going to give me a lot more clarity in about 40 more days.
Fundamentals aside for the moment, the bid has been inching up on HLIX. It's bigger than the ask, which is always bullish. This is all done on extremely low volume, almost illiquid. Uptick Capital hasn't featured the stock yet (assuming that's what they were paid to do) or released any of their work. No volume has ever existed for any of the seed capital to exit. All these things are bullish to me.
25 Sep, 12:59 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » You seem inclined to spin everything positively, as that is what you would like to believe. Cannabase is not really much of anything from what I have gathered - you are giving it too much credit.
25 Sep, 10:40 PM Reply 0
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MichaelRrrrrr
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Again, no need to respond if too busy:
I think Cannabase is more than what you are giving it credit for. It's certainly a lot more than MassRoots. Looking at MassRoots even closer, a good comparison, I don't agree with this S1 as a good way to go public either. I think this one was dressed up to deceive you, Alan.
I don't like IPOs period. For the same reason Buffett doesn't like them. Too many conflicts of interests. Looks like the "analyst coverage" when it went public was a broker getting a kickback from its IPO. It's also falling like a rock on Jupiter. Meanwhile, HLIX and that bid just went up another 50% since we've been talking. On low volume and before any coverage is out from our friends at Uptick.
BTW, I'm in Houston too. I go to Memorial Park a lot after work, getting there at 6:00 p.m. or even 8:00 p.m. If you ever want to jog and talk 420, I'm all up for it. I always jog the 5k loop. But I wouldn't mind walking it too afterwards if you are not a jogger. Weather is great these days. We could talk money. We could talk about what my sister is doing in her new real estate venture. We could talk about my 1400% percent return on HLIX so far and why I'm not selling.
30 Sep, 10:29 AM Reply 0
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MichaelRrrrrr
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OH, and we could also talk about my new stalker on the HLIX board at Investorshub. I also think the moderators there are shady and would like to know your thoughts on those guys in a good conversation. My stalker is a bear, and I like bears as long as they are a challenge. You are are the intelligent HLIX Bear. My stalker friend, I can't the same.
And another thing. MassRoot's attempt to go to the Nasdaq. To me, I can't see that as more than window dressing. I can't see why any CFO would think that was ever a feasibility. You need at least $5 million in equity to even qualify, plus other stipulations. They were nocked out before getting to stipulation 2, so why did they even try? Was it for Press Release only? We could have some good conversation around that 5k walk...
30 Sep, 12:30 PM Reply 0
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MichaelRrrrrr
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Knock, knock. Ahem, pardon me, sir, if I may interrupt. But, the stock shot up 1000%. Officially a 100-bagger. I have sold out with over $50,000 in net profits. We started our discussion at $1.00, and the stock found it's way to $10.00.
I never agreed with the verdict of the jury in the Zimmerman case. You may disagree with the verdict with the market in this case. But a verdict was rendered in both cases. Personally, I like this verdict. And that's why I moved to stocks from politics, Alan. In stocks, you get paid to be right. In politics, you just get stone walled for being right.
2 Nov, 08:17 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Better to be lucky than smart! Congrats on your success. I would have thought as much time as you spend spamming that you would have made more than $50K.
2 Nov, 08:25 AM Reply 1
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MichaelRrrrrr
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LOL No, too conservative, as ironic as that sounds in a penny stock. To an outside observer it looks like risk, but to me, there was never risk. But, yes, if I had a crystal ball, it would have been more! :)
2 Nov, 09:37 AM Reply 0
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MichaelRrrrrr
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You are going to run into Helix soon with all the shows in Vegas you are attending. Tell them "Greenie says hi." If you are lucky enough to meet Venegas, you will see I'm right about him. Would love to hear your thoughts when/iff you do. He is more than a story on paper.
He will tell you the same thing I told you, but more eloquently. And you will believe him, because that's what behavioral finance predicts. And rightly so.
2 Nov, 09:40 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » The valuation, even at $1, was stupid. Penny stocks do crazy things. I don't believe I said anything negative about the company except that I am disappointed that they don't file with the SEC.
2 Nov, 12:51 PM Reply 0
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MichaelRrrrrr
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Actually, in the link below in our discussion with Analyst Ted, you said, "I looked at their financials, composed by someone apparently with a third-grade accounting education. They don't file with the SEC, which is a good enough sign to ignore. But, there are plenty more reasons in my view."
Source: http://seekingalpha.co...
I would still like to know what those "plenty more reasons" are.
In any event, check out HLIX at the Las Vegas conference. I believe I saw your name on the roster; is that correct? As a speaker, even. Talk to Venegas if you have the opportunity. You might be surprised, and he just might open your eyes to the truth. Or maybe not.
At least we both agree that the valuation *at the time I write this* is high.
2 Nov, 03:06 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Subscribe to 420 Investor!
2 Nov, 03:33 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » You brag about your gains - why don't you invest in learning more?
This is what Alan Brochstein doesn't want you, future reader, to see. In this cached link, he refers to this book burning as "spam." You can decide for yourself.
http://webcache.googleusercontent.com/search?q=cache:sHRrWP8G4A4J:seekingalpha.com/instablog/6880-alan-brochstein-cfa/4902878-10-reasons-extreme-caution-cannagrow-holdings-otc-cgrw+&cd=1&hl=en&ct=clnk&gl=us
If a photo-copied is important to you, you can request that I most a photo copy on Flickr.com or a site you prefer. Or if there is a broken link below, just ask me for the full link, and I can supply on it on request.
**DELETED CONVERSATION** below. HLIX TCS was trading at 80 cents when this conversation began in September of 2016.
------------------------------------------------------------------
MichaelRrrrrr
Very good analysis, Alan. I know you and I got off on the wrong foot. This looks like the typical capital structure intended to fleece investors.
I ended up on your page only because this company issued a press release today, mentioning my company:
http://bit.ly/2cEoBpU
They don't list my ticker symbol. However, they state (released 45 minutes ago from the time of this writing):
"CannaGrow Holdings., has been granted access to Cannabase, the largest wholesale marketplace for Colorado's Licensed Marijuana Cultivators & Retailers..."
HLIX bought Cannabase a few months ago. This is the company I asked you to look at and you berated it as not filing with the SEC. Can I ask you respectfully to look again. This stock is not being pumped. I am asking you because despite our differences, I respect the analysis of the capital structure on Cannagrow you just gave.
HLIX does report with the otc markets. As a micro cap company, I would argue that it is more prudent to file this way. It's a big savings for the stage they are at. They have filed form Ds with the SEC. A direct link to their filings are here:
http://bit.ly/2cn0zCg
Can you go in as a devil's advocate and rip me apart and tell me why it's a horrible investment? I said that because I feel that this one is legit. Prove me wrong, please. I would like honest analysis.
My interpretation of their latest quarter is highlighted in yellow here. I invite your discussion. Healthy debate! I really believe this one is different if you would just dive into the facts with me and interpret them with me. As my enemy, as my nemesis, as a colleague, whichever you prefer.
http://bit.ly/29DAvjQ
8 Sep, 08:19 AM Reply 0
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MichaelRrrrrr
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Interesting: You like AMMJ and added it to your portfolio. They have twice the number of shares of HLIX. For the latest quarter, they had virtually the same amount of sales as HLIX, yet they have been around longer. HLIX has a much higher run rate and lost a lot less money on the same sales.
Seems to me if you like AMMJ, you should love HLIX.
10 Sep, 02:57 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Sorry, but I run a subscription service and won't discuss my views on valuation of companies outside of 420 Investor. AMMJ trades at about a $5mm market cap, by the way. I am not sure why you say I like it or "added it to my portfolio" - where is your source of this? It is public information that I sold the position in one model portfolio on Thursday at $0.15.
HLIX, which DOESN'T FILE WITH THE SEC, had 27mm shares roughly as of 6/30, though this doesn't include shares issued for the Cannabase deal, for which no terms were disclosed. So, at $0.80, the market cap is likely higher than $22mm. HLIX also has a weapon of shareholder destruction, 1mm preferred shares that add 60% to the common shares outstanding, whatever they are. This is incredibly unfriendly to common shareholders. So, this pushes it to $35mm. Again, these numbers would be boosted by any shares awarded for Cannabase deal.
Let me add that I have no respect for a company that announces a deal and doesn't disclose the terms or give a sense of the financials of the company it is acquiring, unless it isn't material, in which case they should acknowledge the immateriality. This is the stuff of silly penny stocks and not real companies.
I refuse to have any interest in HLIX as long as they don't file with the SEC. The financial statements are inadequate in my view - impossible to tell what the liabilities of the company might be. No real investor would touch it with a ten-foot pole given its lack of disclosure.
Good luck...
10 Sep, 05:27 PM Reply 0
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MichaelRrrrrr
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Fair enough, Alan. Thanks for taking the time to reply in a professional manner.
The terms of the deal, however, are disclosed in the recent filings. It was purchased for $400,000 cash plus 2.3 million shares of stock (valued at .20 per share), giving it total valuation of $800,000. These shares were not issued for its purchase. They came out of treasury stock. Therefore, there was no dilution on the deal. You can verify that by the share count post-deal and pre-deal.
The preferred shares are held by the company. This would ensure the company can retain control without losing control on future deals. Fully diluted at 35 million is not that many shares.
I do agree that the market cap is high now. It wasn't when I first brought it to your attention. It went up because of this non-dilutive deal and the extreme growth rate the company experiencing.
The otcmarkets have come a long way since 2008 in transparency. Still far from the SEC. They are in a bad neighborhood. I concur.
I agree that all of your reasons are valid reasons to not want to look further and shun the company. They do need to file with the SEC to gain respect. At this stage, I think it's prudent that they not go to that expense. The company has never been pitched to retail investors and no capital was ever raised that way through any kind of "pump and dump" press release.
Helix has a long way to go before they can gain your respect, and ifff/when they get to that point, I don't think they will have a $22 million market cap with a run rate that will get them to $2 million at the end of this fiscal year. It is definitely a frontier market at this time, the Wild Wild West.
Thanks again for your time. I will check in on you within the next 2 or 3 years one way or another with a verdict.
11 Sep, 01:05 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Thanks - I should have checked my notes better, as I saw a disclosure of $349K cash (not $400K). This isn't stated but I see now the 2.3mm shares too - they say this (without specifying):
"Business Assets were acquired for 2,320,000 shares ($0.20 per share)"
and
"Sec 4(a)2 for acquisition of assets of Revolutionary Software LLC – 2,320,000 (April 2016) "
Is "Revolutionary Software" = Cannabase??? It seems so.
Checking my notes, I see that this company has been handing out shares to paid promoters like Halloween candy:
"In April 2016, the Company issued 200,000 restricted common shares to Uptick Capital for fundraising assistance. In April 2016, the Company issued 75,000 restricted common shares to Odeon Capital Group and 75,000 restricted common shares to related party." There are some other disclosures of even more shares awarded for "financial consulting services", but I didn't see them detailed.
Like I said, until they remove the red flag of not filing with the SEC, I don't intend to take them seriously. Hopefully Venegas will realize that he looks like a scammer even if he is not.
The market cap is not $22mm. As you agreed, the convertible preferred increases the market cap by 60%. The market cap is $35mm. For a company that has equity of less than $400K and burns cash in its operations, this requires substantial growth to come close to justifying. I expect more dilution here - already many shares have been added this year.
11 Sep, 02:29 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » I just reviewed the terms more closely and need to make a correction regarding the convertible preferred. It converts to 60% of the common shares outstanding AFTER conversion. So, the market cap isn't $22mm at $0.80 but rather $55mm. Ouch...
11 Sep, 03:45 PM Reply 0
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MichaelRrrrrr
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Perhaps you can tell me who owns the preferred. My understanding is the company, but that is where I get lost. This post here:
http://bit.ly/2cwjV7U
Those shares are actually listed as "anti-dilutive" in the latest filing. I think the company owns those shares as protection against lose control to my understanding, but that would align their interests with mine. Dilution down the line is fine, as long as it's accretive.
This was all issued as part of the "reverse merger" in October of last year. The company has done a lot and come a long way since then, and only created shareholder value since that time. Me, being the only retail investors there is to my knowledge. I'm all alone.
11 Sep, 03:56 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Venegas
11 Sep, 04:22 PM Reply 0
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MichaelRrrrrr
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That's what I thought, that Venegas owns the preferred. I can't understand the legalese of it. That actually makes me feel a lot better.
So, Venegas has a long reputable history, which I touch upon in my posts. I can't find dirt on him no matter how hard I try, and I know that's important to you as your analysis in Cannagrow shows.
Venegas is the founder and CEO of this company, one of two directors, and currently the acting CFO. That's a lot of consolidated salaries. That means his interests are definitely aligned with mine. I see that is a good thing so he is ensured to have 51% control of the company.
He also has the owners of Cannabase, which are two techies from a private company, who have those 2 million shares and vested interests. I'm sure they didn't go into this deal without it being vetted by a good money manager.
Correct me if I'm wrong, but I do see this as an alignment of interests.
11 Sep, 04:31 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » One can have control without something as outrageous as an automatic 60% of the company - this is almost as bad as the company not filing with the SEC.
11 Sep, 06:55 PM Reply 0
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MichaelRrrrrr
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There is a source that gives it some merit here:
http://bit.ly/2cxuTKk
Retain control: Supervoting Stock
What it is: “Supervoting stock” allows founders to maintain control as stockholders throughout the life of the company, even as their ownership is diluted. To implement supervoting stock, the company will typically establish two classes of common stock, Class A and Class B. Class A common stock will carry multiple votes (usually 10-20, sometimes more) per share on all matters in which shareholders are required to vote, as compared to Class B which will carry one vote per share. Founders will be the sole owners of the Class A supervoting stock, and Class B common stock will be reserved for issuance under the company’s option plan to the rank and file. Setting up supervoting will ensure that founders will be able to retain a greater level of control over their company over a longer period of time.
----------------------...
NOW I understand the issuance of the two class of shares at inception of the "reverse merger." It was my suspicion, but you confirmed it. And then this source, as I try to defend it, validates it.
But it's not friendly to me. I get that. It's not in Venegas's best interests to dilute his investors, which are sophisticated/accredited investors at this stage. And, yeah, he needs to prove himself to be Mark Zuckerberg to justify this.
I suspect he is working on Series B funding at this time. These are the serious investors in my eyes. They take more risk than Series C, which iseems to be more your style. They are going to look at all of that, as well as projections, Cannabase's current sales backed out, etc., if Venegas wants the funding he apparently seems he is worth. I will gauge what, if anything he gets, with what MJ Freeway received, as well as Tradiv, and weigh that on a qualitative and quantitative basis. It will be an endorsement and/or a strike against those preferred.
It will be a learning experience, regardless. It is an adventure.
But, yes, I'll give you two legitimate RED FLAGS here: One, the preferred; and two, Uptick Capital. I'm not particularly pleased with either one, but both are in alignment with my interests at this time.
12 Sep, 03:12 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Serious investors won't touch this. It doesn't file with the SEC and the valuation is insane.
I don't know Zachary at all. On paper, he seems like a well qualified guy, but what he has done here (reverse-merger, no SEC filing, onerous convertible preferred) really looks stupid at best. Why didn't he just build his company? What was the rush to go public with all these issues?
12 Sep, 07:35 AM Reply 0
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MichaelRrrrrr
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The reverse merger was always a puzzle to me. I was in that empty shell waiting for somebody to come buy me. I'm a stowaway in Helix. I bought a million shares at a fraction of a penny, and I was revere splitted down to 9,000 shares (rounding off). But it's been a great investment for me. And a great adventure.
But all this time, I've been waiting for a "pump" that never happened. And that's why I say this is something different. They have an old investor's presentation made at the same time of this reverse merger. It talks about plans to go "public" in the future as an exit strategy for investors. But as they talk about the "future," I'm sitting there as a stowaway thinking, we already went public. What are they talking about?
So, long story short, I think this is their "exit" vehicle for venture capital. It's just not a future IPO. But it's also not a vehicle they are pumping. In fact, virtually all shares are restricted. The float is really low, under 500,000 shares. But that wont' last long. In two more months, a full year will have passed. But still, not all will be available. Cannabase's purchase are restricted shares, for a full year minimimum according to the 1933 act to my understanding.
I think it's a vehicle on the side, intended for future use. Rather tan the MJ Freeway plan, which seems to be an IPO down the line. Or will they just do a reverse merger too? All venture capital in Helix is restricted at this time.
For all startups, all investors want an exit strategy. Maybe it's being sold in the future to another company, or it's to go public. But they do need an exit. So, yes, this is a very unorthodox way of going about it. I have been perplexed about it. Not the kind of ship I expected to pick me up.
In that presentation made last year, they DO talk about building the company up "first." This is the process of the "first." The SEC filing is really a bad idea at this time ifyou ask me. On that part, he is right. That is a huge expense, and they don't have the money to be distracted with that. That does need to come later if they plan to do this correctly.
You would be one of those "later" investors, IFFFF they can gain your respect. Buy higher later, as Ted said. That's fine too IFFFF it works out. Startups are risky. I'm just saying that this one is different in that it's not acting like a scam. Yes, there are some red flags. But we shall see.
I was going to sell in the Summer, but they had me at Cannabase. Maybe I'm naïve, but Jennifer, the founder of Cannabase, and her husband, are very interesting to listen to. I know a BSer when I hear one, and she is legit. Maybe she has been duped, but I don't think so.
12 Sep, 08:19 AM Reply 0
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MichaelRrrrrr
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Yes, you are correct. Revolutionary Software is Cannabase. It was not clear to me either. I had to go look it up elsewhere.
I agree about the shares in Uptick being seedy, which I note here:
http://bit.ly/2cOq3Gx
Odeon Capital, however, is not a promoter. I don't know what the shares were issued for, but they are a very legit group as you can see here. Virtually all shared issues have been private placement for venture capital.
http://bit.ly/2cwl5Ag
It is a startup company which is expected to lose money at this stage. This is the seed capital of a series of funding rounds, which is expected for this type of aggressive growth. For angel investors. But, yes, it's hard to make a value case right now. It was easy when the stock was at 10 cents, for the longest time. I jumped into this empty shell at a fraction of a penny, originally.
I just now ran across this article you wrote. This is an interesting read you penned:
http://bit.ly/2cOpMDB
That is the article on Massroots you wrote just recently. That is what Cannabase is to my understanding, which Helix just bought. Cannabase is a small player on the national level. But in Colorado, they have 72% of the market share. Leafly and Weedmaps are their two elephants out there, bringing in over $30 million in revenue between the both of them? By conservative estimates, would you agree?
This company you profile, Mass Roots, DOES file with the SEC. They have 45 million non-diluted shares compared to Helix's 35 million fully diluted. They also have less sales than Helix last quarter, and none of Cannabase's sales are even reflected in that quarter.
I think there is something here, Alan. Like you, I don't like the penny stocks. I bought into this empty shell expecting it to be pumped after somebody eventually came along to buy it. But following the story day by day, it's never been pumped. Not yet, at least. Uptick, I agree, is a disappointment to see. But, a startup does need exposure. I know, I know. That is the clarion call they all say. A true statement that is always abused and loses credibility.
I disclose everything. Those shares are still restricted though, and the company hasn't been profiled yet by Uptick's subsidiary.
11 Sep, 03:53 PM Reply 0
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MichaelRrrrrr
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I don't understand what you mean by "after conversion" The conversion is 60% of OS as I understand it. The OS is also actually 27M, not 22 (rounding up). So a 60% conversion would bump it up to 44M (rounding up).
But, again, the company's interests here are in alignment with shareholders, right? I mean, who owns the preferred? From what I can tell, it's the company itself.
11 Sep, 04:16 PM Reply 0
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MichaelRrrrrr
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Oh, you said market cap, not OS. Sorry. Got it...
11 Sep, 04:17 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » The numbers bounce around here. This is from the subsequent events in the audited annual financials: http://bit.ly/2cOuC3C
"In April 2016, the Company acquired all of the assets of Revolutionary Software, LLC for $300,000 cash and 2,320,000 restricted common shares."
It is at odds with the Q2 financials, which say $349K cash. Maybe something changed between the filing of the audited annual financials, which was AFTER the Q2 report: http://bit.ly/2cwnhYK
You should research Cannabase - it doesn't have "market share" of 72%. Tradiv is much bigger by the way.
11 Sep, 04:27 PM Reply 0
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MichaelRrrrrr
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I really appreciate all this, Alan. You have been a huge help. You filled in some blanks for me. I appreciate you, despite our differences.
I didn't notice that discrepancy. There is actually a $50,000 "investment" in Cannabase from the Q1 report, which I never understood. So I actually arrived at $400,000 cash by adding those two numbers. But like you say, that's ad odds with $300,000. I don't understand.
In any event, thanks for bringing Tradiv to my attention. This is very interesting about them. This is another "weedmaps" or "Leafly" which seems to legitimize the Cannabase business model.
http://on.inc.com/2cwxYuv
Although, Cannabase has more competition than I realized.
" Tradiv has raised $3.4 million in venture capital from Anslinger Capital, CanopyBoulder,."
Still, I can't find a source that specifically pins down market share for Tradiv, or anyone, for that matter. I am extrapolating Cannabase's market share from this statement in their PRs:
"Cannabase’s suite of seed-to-sale marketing tools are utilized by over 72% of the cultivators, infused product manufacturers, and retailers in Colorado’s licensed cannabis industry."
One Source: http://bit.ly/2cOH0Rc
BTW, right after the purchase of Cannabase, Cannabase forged two partnerships with BiotrackTCH and MJ Freeway. MJ Freeway is the fastest growing company in the cannibus industry to my understanding. Perhaps you are familiar with these two? MJ Freeway, btw, has plans to go public in the future. Both have been vetted by venture capital, which to me is a strong endorsement for Helix TCS.
Tradiv, as I'm learning, didn't come to Colorado (Boulder) until November of last year (the time Helix did its reverse merger). Cannabase already had a big headstart on them. Although, the response to Tradiv has been fantastic, which can only bode well for Cannabase too, as I understand it. Cannabase didn't have access to capital like Tradiv, but now that they have Venegas, I think that changes the equation. Plus, Tradiv did a partnership with Blueline Protection Group, which is your typical penny stock fleecing story. Helix employes many disgruntled Blue Line employees now, and rather than a partnership with a Tradiv, Helix flat out bought Cannabase.
This is actually making me feel even better about Helix's pursued strategy.
You should contact Venegas and try to get an interview for your newsletter. At the very least, it would have to be an interesting story he has to say. You have nothing to lose but an interesting read and/or some pearls of wisdom.
11 Sep, 06:07 PM Reply 0
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MichaelRrrrrr
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In fact, push Venegas for why he issued shares to Uptick Capital in your interview. Ask him tough questions. What a great article for 420 Investor. His main competitor is BLPG, and they are in a #$#@ hole! They have been bailed out by Hypur, which also funded your Tradiv, btw. So now I see the connection to Hypur, Tradiv, and Blue Line. Which is a similar model to Helix and Cannabase, yet Helix didn't need a bailout and didn't destroy shareholder value.
Incorporate all of that, and you have one heck of an interesting story.
11 Sep, 06:08 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » My Tradiv? Lol. Where did you see that Hypur invested in Tradiv?
11 Sep, 06:57 PM Reply 0
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MichaelRrrrrr
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I'm wrong. Just skimming, trying absorb a lot of info. This source alleges that Hypur and Tradiv are "in the process of partnering" as of January, 2016.
http://on.inc.com/2cwxYuv
11 Sep, 10:58 PM Reply 0
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MichaelRrrrrr
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This is also interesting about Tradiv, Alan. Now that I actually have time to read the article I skimmed, it's very interesting:
"Tradiv's couriers--it works with Green Parcel Service and Blue Line Protection Group, though it's hoping to develop its own transportation service--will pick up the order and drop it off in one to three days."
So, Tradiv just unknowingly endorsed Helix's strategy. Cannabase has its own transportation service now -- Helix. A vertical integration. Cannabase needs to be really aggressive. When I read articles from California, it's Cannabase they usually refer to, so Tradiv has been off my radar.
BTW, as a side note, I tried to you at I-hub on this CannaGrowth site. I actually couldn't find anything good to say about Cannagrowth. The moderators deleted me (censorship) within one minute. On three occasions. I don't understand why they let you post and not me. Do you have some kind of grandfathered super-power clause on I-hub?
I've been censored on other boards too. Only Seeking Alpha is legit. But I-hug has its use, such as my personal diary and log of Helix, documenting my ongoing adventure.
12 Sep, 08:27 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » You have to learn to play by the I-Hub rules. Read them and learn them. You can always protest deletions that aren't proper, but know the rules. For instance, you can't mention HLIX on CGRW, like you did if I recall.
12 Sep, 08:44 AM Reply 0
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MichaelRrrrrr
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I said "you," but a lot of that is from a cut & paste, comparing HLIX to MSRT on the MSRT board, Alan. The cocky attitude isn't really directed to you. It's just easier to cut & paste and ask, why?? This has to be an example where, all things considered, the company reporting to the SEC does not make it a better investment.
13 Sep, 02:16 AM Reply 0
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MichaelRrrrrr
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I don't have time to read rules, Alan. I'm used to be the exception to the rule. ;)
Alan, I'm having a real problem with this article you drafted here:
http://bit.ly/2cTClxh
They report to the SEC, but that is the ONLY advantage they have over HLIX that I can see. Given all that extra transparency, it's clear HLIX is the better value. And for HLIX to report to the SEC is just not prudent at this time. It would serve only to widen losses. I personally have enough transparency to make an informed decision. But I don't have to follow rules either. My hands are not tied by regulation. That will have to be the end game, and I understand that.
Here is my analysis of MSRT as compared to HLIX:
MSRT similar to Tradiv, Weedmaps, Leafly, and Cannabase. Even Aurora just introduced an app for medical marijuana only.
To begin with, Helix TCS (the new owner of Cannabase) has financials that do NOT reflect the sales of Cannabase yet. That will be seen next quarter. However, they are the transport business. This is vertical integration, So Cannabase has what MSRT has, but with the addition of transport and security to offer. Which is what Tradiv admits it wishes it has, but doesn't offer yet.
1) MSRT is already starting out with 60 million shares fully diluted, plus the 10M new issus with convertibles, putting you at 80 million shares fully diluted. Granted, 10M are out of the money, so I'll go with 70 million to keep it simple.
Helix TCS (HLIX) has you beat at 50 million.
2) HLIX has 83,000 in cash last quarter, you have 53,000.
3) Helix has strong working capital, MSRT has negative working capital, making it insolvent without the dilutive cash infusion coming your way.
4) MSRT has negative shareholders equity, HLIX has a book value of $350,000.
5) MSRT has year-to-date sales (6 months) of $600,000. HLIX $870,000, and Cannabase isn't even reflected in that figure yet.
6) MSRT lost $2.1 million YTD; HLIX lost $500,000 YTD.
With Cannabase's integration, they get to share in HLIX's fixed costs. MSRT has liquidity in its stock as the only advantage, but that's only short sighted. And with seedy Uptick involved, that's sure to change. If MSRP can trade at its market cap, what's to stop HLIX from trading at that price or higher? According to perfect market theory, nothing. But I'm pretty sure you know, as well as I do, the market is not perfect. So, we shall see...
But in the end, we do need at LEAST $10 million in sales to make a value case for HLIX's current market cap. I'll be very interested to see what Cannabase brings to the table. I can safely say with extreme confidence that HLIX is on track to exceed $2M in sales this fiscal year.
13 Sep, 03:54 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Good luck. Sounds like you should join 420 Investor!
13 Sep, 08:47 AM Reply 0
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MichaelRrrrrr
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So far the moderators on MSRT at I-Hub are not following the rules, allowing me to speak. That's how I am.
I brought this to their attention too, Alan:
"MassRoots has 24 full-time employees working out of headquarters in downtown Denver, Colorado. The majority of these employees are engineers and designers focused on developing new features for the MassRoots platform. We believe that over the long run, a small, talented and close knit team of A will outperform larger teams of B and C."
That's interesting. Cannabase has just 3, and two of those the husband/wife founders. I don't think you can get smaller and close knit than that. That explains some of their wide losses. Of course, reporting to the SEC isn't cheap either. And at their stage, I'd argue not very prudent either.
13 Sep, 07:38 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » I apologize, but I don't have the time or interest to help you with I-Hub or to discuss your every post in every forum.
13 Sep, 08:48 AM Reply 0
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MichaelRrrrrr
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You don't have respond, Alan. I know you're busy. I just listened to your full interview here:
http://tinyurl.com/hnm...
Very interesting. Good to put a voice to the name. The CFA is impressive. All good points. I can't make a value case on HLIX based on the last quarter.
I just want to address something you said above:
"I don't know Zachary at all. On paper, he seems like a well qualified guy, but what he has done here (reverse-merger, no SEC filing, onerous convertible preferred) really looks stupid at best"
I have found third-party articles that corroborate his background. For decades, he has invested in frontier markets. Undeveloped countries, with a heavy focus in Africa. That would be unregulated markets, and a very contrarian philosophy. He also has a strong background in the security firms, which is right up Helix's alley. This would be consistent with his MO, going public in a "frontier market" of sorts.
I think we are going to see extreme volatility, but I don't want to make a case for value. I want this company to show profits, and I want us both to learn something from this. I think you will be surprised in five years of what Zac will make of this company. I'm a good profiler people. The finances here are not bad. What you would pay for it is an entirely different issue.
24 Sep, 03:04 PM Reply 0
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MichaelRrrrrr
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NO NEED TO RESPOND:
I also forgot to add that I enjoyed your MassRoots commentary in that link above. I like your consistent valuation in that you are not a shareholder, but following the company. Interesting commentary the S1 and how they went public. You are profiling, and I can't blame you. If I saw a man wearing a dark suit with a club in his hand, looking exactly like the man who always beats me up in some dark alley after luring me into his presence, I'd stay away from him too.
You like the advertising potential of MassRoots. I know you don't think Cannabase is the market leader, but I still can't find any contradictory evidence to show they aren't. They claim they are, and they have 72% of the licensed wholesalers in Colorado as their clientele. there may be a lot of cross polination there, but that is a lot of exposure.
So they have the same advertising potential. This is how they generate income too. But unlike Massroots, they can actually match wholesalers to buyers, and they take a cut. MassRoots claims its working on making that happen for them as well, which is an endorsement to Cannabase's current business model.
This dark figure in the OTC suit, however, doesn't have the high expense and SEC regulatory constraints of MassRoots. And HLIX, as mentioned above, has more sales and loses less money alone. Cannabase's figures are already backed out of the latest report, but won't be next month. The quarter ends in a few days, and a lot of truth is going to come to light.
24 Sep, 03:38 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » The deal closed in April - why is it that you think the Q2 results excluded Cannabase?
24 Sep, 10:21 PM Reply 0
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MichaelRrrrrr
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That throws me for a loop. I apologize. That's why I like analyst input and someone checking my work. I didn't look at that date close enough. I thought it came on the back end because the PR didn't come out until July. Then I don't know why they waited so long to announce it.
Two partnerships with MJ Freeway and BioTrack came a week later in July, so I'll go with those two being closed in July. Those are two private companies that have both been vetted by venture capital to the tune of more than $7 million each. That's a good endorsement to me, especially considering the fact that they two are competitors yet both found solice in Cannabase. Not Massroots, but Cannabase. And both are fighting each other over government contracts in Puerto Rico. Actually, KIND (also private) is also battling BIOTrack's government win in Puerto Rico. There are a lot of qualitative variables here.
Were it not for that purchase of Cannabase, Helix actually would have ended the quarter with more cash than it started with. But, that also wouldn't have been prudent to sit on seed capital like that since the ratio of working capital would be too high for investment purposes. And still, working capital is good. But sad to say, now I'm confused about what is Cannabase and what is Helix. I want them separated out. I still think next quarter is going to give me a lot more clarity in about 40 more days.
Fundamentals aside for the moment, the bid has been inching up on HLIX. It's bigger than the ask, which is always bullish. This is all done on extremely low volume, almost illiquid. Uptick Capital hasn't featured the stock yet (assuming that's what they were paid to do) or released any of their work. No volume has ever existed for any of the seed capital to exit. All these things are bullish to me.
25 Sep, 12:59 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » You seem inclined to spin everything positively, as that is what you would like to believe. Cannabase is not really much of anything from what I have gathered - you are giving it too much credit.
25 Sep, 10:40 PM Reply 0
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MichaelRrrrrr
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Again, no need to respond if too busy:
I think Cannabase is more than what you are giving it credit for. It's certainly a lot more than MassRoots. Looking at MassRoots even closer, a good comparison, I don't agree with this S1 as a good way to go public either. I think this one was dressed up to deceive you, Alan.
I don't like IPOs period. For the same reason Buffett doesn't like them. Too many conflicts of interests. Looks like the "analyst coverage" when it went public was a broker getting a kickback from its IPO. It's also falling like a rock on Jupiter. Meanwhile, HLIX and that bid just went up another 50% since we've been talking. On low volume and before any coverage is out from our friends at Uptick.
BTW, I'm in Houston too. I go to Memorial Park a lot after work, getting there at 6:00 p.m. or even 8:00 p.m. If you ever want to jog and talk 420, I'm all up for it. I always jog the 5k loop. But I wouldn't mind walking it too afterwards if you are not a jogger. Weather is great these days. We could talk money. We could talk about what my sister is doing in her new real estate venture. We could talk about my 1400% percent return on HLIX so far and why I'm not selling.
30 Sep, 10:29 AM Reply 0
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MichaelRrrrrr
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OH, and we could also talk about my new stalker on the HLIX board at Investorshub. I also think the moderators there are shady and would like to know your thoughts on those guys in a good conversation. My stalker is a bear, and I like bears as long as they are a challenge. You are are the intelligent HLIX Bear. My stalker friend, I can't the same.
And another thing. MassRoot's attempt to go to the Nasdaq. To me, I can't see that as more than window dressing. I can't see why any CFO would think that was ever a feasibility. You need at least $5 million in equity to even qualify, plus other stipulations. They were nocked out before getting to stipulation 2, so why did they even try? Was it for Press Release only? We could have some good conversation around that 5k walk...
30 Sep, 12:30 PM Reply 0
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MichaelRrrrrr
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Knock, knock. Ahem, pardon me, sir, if I may interrupt. But, the stock shot up 1000%. Officially a 100-bagger. I have sold out with over $50,000 in net profits. We started our discussion at $1.00, and the stock found it's way to $10.00.
I never agreed with the verdict of the jury in the Zimmerman case. You may disagree with the verdict with the market in this case. But a verdict was rendered in both cases. Personally, I like this verdict. And that's why I moved to stocks from politics, Alan. In stocks, you get paid to be right. In politics, you just get stone walled for being right.
2 Nov, 08:17 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » Better to be lucky than smart! Congrats on your success. I would have thought as much time as you spend spamming that you would have made more than $50K.
2 Nov, 08:25 AM Reply 1
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MichaelRrrrrr
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LOL No, too conservative, as ironic as that sounds in a penny stock. To an outside observer it looks like risk, but to me, there was never risk. But, yes, if I had a crystal ball, it would have been more! :)
2 Nov, 09:37 AM Reply 0
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MichaelRrrrrr
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You are going to run into Helix soon with all the shows in Vegas you are attending. Tell them "Greenie says hi." If you are lucky enough to meet Venegas, you will see I'm right about him. Would love to hear your thoughts when/iff you do. He is more than a story on paper.
He will tell you the same thing I told you, but more eloquently. And you will believe him, because that's what behavioral finance predicts. And rightly so.
2 Nov, 09:40 AM Reply 0
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Alan Brochstein, CFA
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Author’s reply » The valuation, even at $1, was stupid. Penny stocks do crazy things. I don't believe I said anything negative about the company except that I am disappointed that they don't file with the SEC.
2 Nov, 12:51 PM Reply 0
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MichaelRrrrrr
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Actually, in the link below in our discussion with Analyst Ted, you said, "I looked at their financials, composed by someone apparently with a third-grade accounting education. They don't file with the SEC, which is a good enough sign to ignore. But, there are plenty more reasons in my view."
Source: http://seekingalpha.co...
I would still like to know what those "plenty more reasons" are.
In any event, check out HLIX at the Las Vegas conference. I believe I saw your name on the roster; is that correct? As a speaker, even. Talk to Venegas if you have the opportunity. You might be surprised, and he just might open your eyes to the truth. Or maybe not.
At least we both agree that the valuation *at the time I write this* is high.
2 Nov, 03:06 PM Reply 0
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Alan Brochstein, CFA
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2 Nov, 03:33 PM Reply 0
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Alan Brochstein, CFA
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Author’s reply » You brag about your gains - why don't you invest in learning more?
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