Digital Ally, Inc. (NASDAQ: DGLY), which develops, manufactures and markets advanced video surveillance products for law enforcement, homeland security and commercial applications, is pleased to announce a new development in its ongoing legal battles against Axon Enterprise, Inc. (NASDAQ: AAXN, formerly known as TASER International, Inc.). In yet another victory for Digital Ally, the Patent and Trademark Office rejected Axon’s most recent challenge to Digital’s law enforcement patent portfolio. This defeat is the latest in a string of six losses for Axon, having now filed six unsuccessful validity challenges with the Patent Office.
Why It Matters: DGLY’s patented VuLink® auto-activation technology is the first product on the market to fully integrate in-car cameras and body-worn video. The Company has deployed more than 93,000 units worldwide in more than 40 countries. More than 8,000 law enforcement officers in the United States use DGLY products.
DGLY’s litigation against Axon and WatchGuard is advancing. The Company can claim monetary damages from Axon Enterprises, Inc. and WatchGuard if the Company has a favorable outcome in its patent infringement suit. In a recent press release, the Company announced that its patent-infringement case against WatchGuard had been lifted and the case is now moving towards trial.
Disclosure
Digital Ally, Inc. (NASDAQ: DGLY) is a client of RedChip Companies, Inc. DGLY agreed to pay RedChip Companies, Inc., a monthly cash fee for four (4) months of RedChip investor awareness services.
GSRX Industries (OTCQB: GSRX) has had a productive week. The cannabis startup led by former Macy’s Midwest Chairman & CEO Les Ball opened its fourth medical marijuana dispensary in Puerto Rico this week and signed a binding Letter of Intent (LOI) to acquire its second dispensary in California.
Why It Matters: Cannabis stocks have been getting a lot of positive attention recently. With more states enacting favorable marijuana legislation and the end of federal marijuana prohibition in Canada, consumer giants like Coca-Cola and Constellation Brands are staking out interests in the space. This is likely just the very beginning of a maturation cycle in the sector that could lead to massive gains for many early investors.
Under the expert guidance of its highly experienced CEO, GSRX is executing on a plan to become a dominant player in the space – at all levels. In addition to the four dispensaries now open in Puerto Rico, the company has another five locations under construction on the island. As these locations open for business in the coming months, considering the limited number of licenses available on the island, GSRX stands to own the dominant brand in a market some estimate could be worth hundreds of millions of dollars annually.
In addition to Puerto Rico, GSRX is focused on growing its foothold in the largest market in the US – California. Earlier this year the company acquired a dispensary in the coastal town of Point Arena in Northern California. Since its acquisition, sales have grown rapidly, and the company expects further operational improvements moving forward. With a blueprint for success established, GSRX announced a binding LOI to acquire a Southern California dispensary in Desert Hot Springs last week. No reason not to expect similar success once this acquisition closes, which is expected to happen before year end.
The company’s growing base of dispensaries is complemented by investments it’s made in cultivation, extraction, and manufacturing operations in the Bay Area of California. Over the summer the company announced the development of larger facilities as it prepared to scale its operations. Look for comments about the expansion from management in the company’s upcoming third quarter results, which are expected in mid-October.
What’s Next: The recent news of Coca-Cola (NYSE: KO) exploring opportunities in the cannabis space has sent many marijuana stocks higher. While the biggest gains have been relegated to Canadian stocks, longer term, the entire space stands to benefit. GSRX has so far not participated in the sector rally. As with many smaller stocks, GSRX incurred significant expenses in the going public process, many of which were paid in stock, as is common. Often this creates a bit of overhang that can put pressure on newly-traded smaller stocks. This is rarely connected to the longer-term performance of a company. If a company performs, growing sales and profit, eventually it can break through this overhang and begin trending higher. With the benefit of strong tailwinds in the overall space, and a strong start to its operations, we think GSRX is well positioned to be one of the stocks that breaks through and trends higher.
Disclosure
GSRX Industries (OTCQB: GSRX) is a client of RedChip Companies. RedChip Companies, Inc. received 1,000,000 registered shares of GSRX for consulting services and 50,000 shares for investor awareness services. Be advised RedChip intends to sell some or all of its shares at any time, including when you are buying.
Last week we reported on Level Brands (NYSE American: LEVB) launch of several CBD products through its partnership with Isodiol. The shares are now up more than 50% year-to-date, and with recent positive coverage in Fast Company and Barron’s, more and more investors are catching wind of LEVB’s long-term potential.
Why It Matters: This move should come as no surprise to regular RedChip Money Report readers. We first profiled LEVB earlier this year when it was trading in the $3 range. Its deal with Isodiol has been public since January, providing smart investors plenty of time to accumulate before the crowd showed up. That’s why we always look to build positions when stocks are still under the radar of bigger investors. While investors that own LEVB in the $3 range may consider taking partial profits, and adding back in on weakness, longer-term, the upside for LEVB is just getting started. As their growing portfolio of agreements reaches the commercialization stage, revenue share arrangements should begin to accelerate growth in the months ahead, and this trend doesn’t appear to be slowing any time soon.
Disclosure
Level Brands (NYSE American: LEVB) is a client of RedChip Companies. LEVB agreed to pay RedChip a monthly cash fee and 5,000 shares of Rule 144 stock for four months of RedChip investor awareness services.
PepsiCo (NASDAQ: PEP) is taking a hard look at the cannabis industry, as other beverage makers explore the market.
"I think we'll look at it critically, but I'm not prepared to share any plans that we may have in the space right now," Chief Financial Officer Hugh Johnston told Jim Cramer and Sara Eisen on CNBC's Squawk on the Street on Tuesday.
Cannabis, which is federally illegal in the U.S., but legal in some states and in Canada, has attracted increasing attention from food and beverage companies as either an opportunity for future growth, or conversely, a threat to their brands.
Tilray Shares Find Support After Wild Ride
Tilray (NASDAQ: TLRY) captivated Wall Street two weeks ago as its shares nearly doubled in a day. The market was quick to correct this outsized move, and in the days since, the stock appears to have found support for another leg up.
News of the company’s High Park Farms subsidiary receiving its sales license from Health Canada on October 1 adds to the already bullish case.
In addition to serving the adult-use market, Tilray is an active player in the medical cannabis space. In fact, news of the company receiving approval from the U.S. to import cannabis for clinical trials was originally what sent its shares precipitously higher a few weeks ago.
Overall, despite some hurdles still ahead, the overwhelming news coming out of the cannabis space this year is that the sector has arrived as a highly legitimate investment opportunity.
MamaMancini's Holdings, Inc. (OTCQB: MMMB), a manufacturer and marketer of specialty pre-prepared, frozen and refrigerated all-natural food products (as defined by the United States Department of Agriculture), today announced financial results for the second quarter of fiscal year 2019, ended July 31, 2018.
The Backstory: Financial highlights for the quarter and six-month period: Second quarter fiscal 2019 sales were $5.6 million compared to $7.0 million in the prior year period. Sales for the first half of fiscal 2019 increased 8% to $13.4 million compared to $12.4 million in the prior year six-month period.
Net loss available to common stockholders was $(210,195), or $(0.01) per diluted share, during the second quarter of fiscal 2019, compared to net income available to common stockholders of $123,595 or $0.00 per diluted share in the same quarter last year. For the six-month period: net income available to common shareholders was $113,806 or $0.00 per diluted share, compared to $72,562 or $0.00 per diluted share, last year.
Gross margin for the quarter was 36.6% versus 33.6% in the second quarter of last year. Gross margin for the six-month comparable periods was 36.6% this year and 34.7% last year.
EBITDA for the second quarter was $312,000 compared to $488,000 in the second quarter of fiscal 2018. Six-month EBITDA was $1,021,000 versus $803,000 for the comparable period; an increase of 43.4%.
Operating cash flow for the six-month period this year increased 339% to $1.44 million versus $328,000 last year.
Other income and net income in the quarter ended July 2018, was negatively affected by $112,500 in non-recurring charges related to the extension of the Manatuck Hill Partners note to May 1, 2019.
Why It Matters: MamaMancini’s has significant growth potential for its specialty-food product lines of authentic, home-style, all-natural Italian meatballs, meat loaf, stuffed peppers, and pasta (lasagna). The Company has successfully launched 12 new products on QVC since June 2015, and its distribution channel has grown to more than 12,300 U.S. supermarkets, capturing 32% of the market.
Disclosure
MamaMancini’s Holdings, Inc. (OTCQB: MMMB) is a client of RedChip Companies, Inc. MMMB agreed to pay RedChip Companies, Inc. a monthly cash fee for RedChip investor awareness services and consulting services.
Quote of the Week
"There are a lot of risky companies built on one or two products, be wary of those."
Dave Maley, Manager Ariel Discovery Fund
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