As we mentioned in our previous piece about SIGO called "SUNSET IS GRP INC COM USD0.001 (POST REV SPLT (OTCMKTS:SIGO) On The Verge Of A Breakout", the upward trend continued. The article was published on August 14, 2017 when the share price was less than $1.00. Have a look at the recent share price action, and note the astonishing returns delivered by this medical cannabis company.SourceBut, what's new? We mentioned that the company had announced a 80% share reduction count, but the total amount of shares outstanding did not change. We said the following about it:
"The company reduced the amount of new shares that can be issued. But, the total amount of outstanding shares did not change. Hence, shareholders did not earn a large stake in the company. On August 8, 2017, we could read that the company did what it had promised. Additionally, in the same news, the CEO, T.J. Magallanes, reminded that 66k square feet of grow space was planned at that point in time." Source
Well, the good news is that we were not correct. The company decided later to cancel 46,000,000 shares of common stock. We will provide all the details in just a minute.Recent Developments - The Reduction of shares is affecting the share priceLet's briefly recap the business objectives of SIGO for those readers who are getting to know this company for the first time in this article. SIGO is focused on the cultivation of medical cannabis. It leases a 12,000 square feet greenhouse in Northern California, wherein the company has been approved for cannabis cultivation.What are the new filings? The most relevant was released on August 19, 2017. The market got to know that SIGO was cancelling 46,000,000 shares of common stock. The most significant sentence that we found was the following one:
"The outstanding after the cancellation will be approximately 4 million shares. " Source
What happened to the share price? As the amount of shares outstanding was drastically reduced, shareholders got richer as they own a larger part of the company, so the share price increased. From $1.50 level, the share price went on to touch the $2.10 level.But the story does not end here. Other filings were released in August, which was quite a busy month for the company. On August 16, 2017, it was communicated that the company is holding discussions to increase the amount of square footage.
"On August 15, 2017, we met our current leaseholder regarding leasing additional square footage for our first phase of expansion. The company will be conducting follow up discussions in the coming days on leasing between 130,000 and 205,000 square feet of the 750,000 square feet the landlord has available for lease." Source
The market appreciated the news, as more leasing space means more marijuana plants. This is good news, but it could be better. We need to be alert, as if the company releases a more definitive agreement with the leaseholder, the share price could jump higher. Additionally, it was noted in the same press release that SIGO will show its facilities on October 18, 2017.In another filing, it was said that the company would announce the dividend rate by August 23, 2017. Additionally, SIGO provided some information about the date on which new information on the first phase of expansion would be released. This is what the market needed to know:
"The company is currently in discussions regarding the leasing of additional greenhouse space. Part of the discussion centers around the new regulatory environment for 2018. Beginning in 2018, all cultivation and manufacturing licensees will be required to send their products to a licensed distributor who can then pass them to dispensaries. " Source
Furthermore, in another filing, SIGO responded to an email received by the company:
"Q1. Would the company’s officers consider cancelling their common stock in exchange for preferred stock?A1. The Company’s officers’ are agreeable to this and will begin the process next week to complete the transfer of the common to preferred. The cancellation of the common would reduce the outstanding share count to approximately 4 million shares." Source
Finally, on August 22, 2017, the market received some information about a facility tour that will take place on September 16, 2017.
"The Company will be holding an additional shareholder facility tour on September 16, 2017. Shareholders who have made a reservation for the facility tour will be picked up 11:00am at the Marriott Courtyard in Salinas. The Company will drive the individuals to the facility for the tour. The Company will provide food and refreshments. Those that are interested in attending should make reservations by emailing their name and photo id to info@sunsetislandgroup.com." Source
Additionally, it was noted in the same filing that a cash dividend of $.001 per share will be given to its common shareholders (Record date of the dividend is September 15, 2017).ConclusionAs a result of the drastic reduction of the shares outstanding and the increase in theadditional square footage for cultivation, SIGO has been a big winner this year. The share price has been pushed up from $0.25 to almost $2.25. Additionally, we saw how the company is trying to connect with shareholders by showing its facilities and it is responding to emails received by the use of the OTC Markets filings. In our opinion, the work of the investors relations team is good, and it may pay off in the near future. In the meantime, we expect profit taking to pressure shares. We urge shareholders to book profits and wait for a re-entry on the dip.Be sure to check out our coverage on SIGO. We will be updating our subscribers as soon as we know more. For the latest updates on SIGO, sign up below!Image courtesy of TMartin_33 via FlickrDisclosure: We have no position in SIGO and have not been compensated for this article.
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