Simlatus Corp (OTCMKTS: SIML) has had its fair share of controversy, which explains why short sellers have continued to push the stock lower. The stock has since imploded after a 300% plus rally in April, as investors reacted to delays in the delivery of financial results for FY2018.
Simlatus Price Analysis
The stock is currently languishing near all-time lows having felt the full force of short sellers. While the underperformance is a point of concern, the stock might as well have hit the floor and due for a correcting higher.
The filling of audited financials for the period ending December 31, 2018, could help ease tensions consequently trigger a bounce back. The Company has also continued to tout its multiple revenue streams in the CBD industry, broadcast industry as well as internet provider industry that look set to shore market sentiments.
The Integration of the Proscere Bioscience acquisition is another development that affirms the Company’s long-term prospects amidst the underperformance in the stock market. Management touting $250 million worth of distribution contracts should also continue to excite investors.
A plunge to the $0.01 mark means the stock is back to where it started the year at. Consequently, a rally followed by a close above the $0.02 mark, as was the case in April could open the door for the stock to bottom out and make a run for this year highs.
A flurry of positive developments in our view supports a breakout from current lows. However, failure to take out the $0.02 resistance level would leave the stock vulnerable to trading sideways as was the case for the better part of the first quarter.
Simlatus Corp Background
Simlatus Corporation is a diversified holding company with operations in a number of industries. For instance, the Company manufactures markets and owns broadcast equipment and software. In addition, it manufactures and sells cold-water/alcohol CBD extraction systems for medical grade CBD utilization.
$250 Million Distribution Contracts
Simlatus Corporation has come through and filed FY2018 financials, a tailwind that had triggered a sell-off from this year highs. With the filling, the management has confirmed the inking of agreements with three-distribution partners, poised to generate as much as $250 million in revenues over the next five years. The distribution agreement is for the Company’s Cold Water CBD/JHEMP Extraction systems signed through the Company’s new subsidiary, Proscere Bioscience.
Proscere Bioscience integration marks an important milestone in Simlatus Corporation bid to diversify its revenue streams. The unit is engaged in the manufacture of the first commercial industry standard cold water CBD/HEMP extraction system.
“On March 29, 2019, we were very pleased to announce that our new subsidiary, Proscere Bioscience Inc., entered into two lucrative distribution agreements; first with United Opportunities, LLC allowing the rights to sell the Cold-Water Cannabis/Hemp Extraction Systems within all of Canada and Europe,” said CEO Richard Hylen.
Simlatus Corporation has since opened discussions with the largest CBD extraction producer in the world. The producer in question producers 4m pounds of biomass a month and will require.
CBD Extraction System Prospects
Simlatus Corporation is relying on its new cold-water CBD extraction system to be a key driver of the bottom line going forward. Plans are underway to start delivering the extraction system by the end of the next quarter.
“Our CBD extraction systems range from $750,000 for a high-end commercial system capable of 3000 gallons per day to our low-end model costing $400,000. […] Our commercial cold-water CBD extraction system is expected to yield $225M over the next five years, based upon expected growth and application,” stated Mr. Hylen.
In addition, Simlatus Corporation continues to strengthen its broadcasting business following the acquisition of Satel Group. The high-rise DirecTV provider is expanding DirecTV and internet services across the San Francisco Bay area, strengthening yet another stream of revenues.
Simlatus Corp is slowly coming through after a roller-coaster first half that has seen the stock spike to 2019 highs before succumbing to bearish pressure. The signing of distribution deals worth $250 million underscores business growth that should continue to excite investors.
The company has also made significant strides in strengthening its prospects in the CBD space with its new CBD Extraction system. The company is also enjoying growth in its broadcasting business. As the dust on financial results settles down, the stock could rise from the dead having hit the floor in recent weeks.
A spike followed by a close above the $0.02 mark should make Simlatus Corporation an ideal bounce-back play.
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Disclosure: We have no position in SIML and have not been compensated for this article.