Easton Pharmaceuticals, Inc. (EAPH)

[davidsson10]

NEW YORK (TheStreet) -- These stocks are hoping to ride the green rush of marijuana trading following the recent push to legalize marijuana, but investors need to be aware that many are not as green as they seem. These penny pot stocks have very similar stories.

Most began life in a different line of work and only recently jumped into cannabis. It's a hot trend and many investors don't bother to look any further than the name. Some of these companies are serial name changers. They frequently issue shares in the hundreds of millions. They tend to pay bills and settle debts with stock. They have little cash on hand. Some don't even have a marijuana product yet, but investors don't care, as these stocks are rapidly approaching bubble heights.

Easton Pharmaceuticals, a speciality pharmaceutical company which trades at 7.5 cents, has been looking to gain a foothold in the medical marijuana space. Last August it announced that it had entered into discussions with two private independent companies in Canada for a proposed joint venture or partnership to share medical marijuana revenue. In October, it announced an application to obtain a distributorship license towards its Canadian medical marijuana initiatives. Last month, Eastern Pharmaceuticals said that it is "moving towards" signing a contract to retain and hire a legal expert on medical marijuana in Canada to file a growers'/distributorship license on the company's behalf. Last week, Easton Pharmaceuticals said that it has entered into "high level negotiations" with a private company based out of British Columbia which has been approved for a medical license to grow and distribute medical marijuana throughout Canada. The company couldn't comment on the timing when contacted by TheStreet and would only say that it's in serious discussions with a company that has a license to grow and distribute marijuana.

Away from medical marijuana, the company's first product is a female sexual enhancement gel marketed under the brand name Viorra. It also has a minority interest in a cancer drug Xilive. Easton Pharmaceuticals has changed its name twice in the last five years and frequently files its earnings late. It has more liabilities than cash - $197,754 as of September 2013. It also issues stock to generate cash. (During the period between July 2013 and September 2013 the Company issued 84,200,000 shares of its common stock). In October, when Easton announced its application for a distributorship license, the stock was 1/3 of a penny. Now, the stock is 7 cents. That's a 3,765% increase in six months just for filing an application.