Looking for a new play in the cannabis patch that the crowd may move to next? Take a close look at Cnty LINE ENERG/SH (OTCMKTS:CYLC). The company just pivoted through a strategic shift and a name change, and the official message is just about growing vegetables. But we all know where this is headed. Wink. And, given the extremely tiny float here (under 1.5 million shares), increased attention could feed a fire. In addition, the company just announced it has completed Share Exchange Agreements with the Company’s two largest shareholders, CEO and director, Eric Dena, and CYLC director, Vince Andreula.
According to the release, “As a result of the Agreements, the number of shares of Common Stock issued and outstanding has been reduced by 49%. Under terms of the Share Exchange Agreement with Mr. Dena, he has agreed to surrender 30,000,000 shares of Common Stock in exchange for 300,000 shares of Series B Preferred Stock. Under terms of the Share Exchange Agreement with Mr. Andreula, he has agreed to surrender 15,000,000 shares of Common Stock in exchange for 100,000 shares of Series A Preferred Stock and surrender an additional 10,000,0000 shares of Common Stock in exchange for 100,000 shares of Series B Preferred Stock.”
Cnty LINE ENERG/SH (OTCMKTS:CYLC) had been trumpeting itself as an exploration stage company that primarily engages in the acquisition, exploration, and development of oil and gas properties. It was focusing on various oil and gas projects located in Hayter region in the east central Alberta area.
However, now, it would appear we are seeing this company move into the explosive cannabis space via its new product: The Grow Box.
According to company materials, “Our Mission at Grow Box is to provide every household in America with the ability to grow the finest plants and vegetables from the comfort of their own home. Whether you’re growing just for your own family or interested in mass production, we’ve got you covered. The Grow Box 5000 is completely expandable green technology. Programmed easily from your phone and made from hospital grade materials, there is nothing else like it!”
The company’s website notes that “The GROW BOX 5K is a fully automated smart hydroponics growing system for growing plants and vegetables from the comfort of your own home. The GROW BOX 5K is fully automated and controlled from your smartphone. Set it up and walk away. The GROW BOX 5K will do the rest. Now anyone can grow the highest quality plants and vegetables from the comfort of their own home. Take all the guesswork and technical know-how out of the equation. Now you can control everything with the touch of a button! The Grow Box 5k can grow with you! Multiple Grow Boxes can be linked together and controlled from a single interface. With our state of the art space saving design you can stack and arrange Grow Boxes to fit any room.”
Into the Green
This is a huge transition that could massively drive the shares of CYLC. Cannabis has been a booming theme once again, with the space heating up as institutional money starts to cotton onto the thesis due to the recent IPO of TLRY, the big move by Constellation into CGC, and a number of research reports from “on high” that have anointed the investment theme as the next big theme.
For example, in a major research note to its clients last week, RBC Capital Markets estimated that US marijuana sales are catching up to those of alcoholic beverages and that legal sales alone could be worth $47 billion ten years hence.
“In this US, the legal cannabis category is set to grow at a 17% CAGR over the next decade to as much as $47 billion in annual sales (this compares to the current diaper category at $4 billion in sales),” noted the piece.
Eric Dena, County Line CEO, commented, “Dramatically reducing the number of CYLC common shares outstanding by almost 50% and strengthening our corporate share structure with a powerful voting control non-convertible preferred class will immediately increase common shareholder value and should better position the Company to take advantage of any potential opportunities, acquisitions, or partnerships that could further accelerate our growth strategy.”
Traders will note just shy of 120% piled on for shareholders of the name during the trailing month, but that move comes in the context of a larger bearish trend. However, CYLC is a stock with a past that has featured a litany of sudden rips to the upside. Moreover, the listing has registered increased average transaction volume recently, with the past month seeing above 950% over the long run average.
Traders should note this as important given the stock’s extremely small trading float of 1.46 million shares. As savvy traders are well aware, a mechanically driven price squeeze can result from this type of mix of small float and ramping attention from traders.
Earning a current market cap value of $192.3M, CYLC is something that needs to be on the radar.