Medical marijuana company Easton Pharmaceuticals (
OTO:EAPH,
Stock Forum) posted a series of odd news releases Tuesday in which the company appeared to announce it was buying into a Colorado marijuana grow facility, that it was going to sue a blogger who had posted disparaging remarks about them, and later that it wasn’t entering into a Colorado grow deal after all because, you know, that would be illegal.
Seeking Alpha writer
Matt Finston had posted two pieces on Easton to that website, with one titled
Marijuana stocks: Investing in Canadian schwag, and another titled
Reevaluating the Schwag: Easton Pharmaceuticals, still schwag, in which he was extremely bearish about the company.
Finston’s reporting noted a large amount of money being paid to fly-by-night stock promotion companies like Blue Horseshoe Stocks, HotPennyPicks, AwesomeStockPick and PennyAuthority.com, and also featured screenshots of alleged emails from company management in which they decry that he “even tweet negative crap [sic] about us like its a game to you.”
Other email screenshots appear to show management inducing Finston to write nice things about the company or “we will seriously consider having our lawyer contemplate launching a lawsuit against you for the market value lost.”
Finston was unbowed by the threats and posted his second piece today, leaving Easton management to respond by sending out a news release announcing “legal action” against Finston based on what they called his “slanderous” articles.
The news release, which is adorably short on legalese, good grammar and any notice of actual legal action,
stated as follows:
“Easton Pharmaceuticals was the victim of a slanderous article by a Matt Finston of seeking alpha posted in March of 2014. It has now come to the company's attention that a second article attacking the company was once again posted today. The writer, Mr. Matt Finston and seeking alpha who normally only post or write on mid to large cap stocks, posted an article on the Company that was not only once again inaccurate, but made libelous allegations against its products and others involved in the company. The second article on Easton Pharmaceuticals, released this morning has once again been released after a recent uptrend in the companies trading stock. Both times the articles were followed by massive short or negative posts on many investor chat boards in an attempt to dis-credit the company. The most recent article goes to great lengths to cause as much damage as possible to the company which is thought by the company's attorney as well as by others to be out of the ordinary.”
The release continued, “Easton believes it will soon join with other companies who have either sued Mr. Finston as a response to similar attacks or are in the process of launching lawsuits.”
No such companies were named.
Finston says he hasn’t been contacted by Easton lawyers in any way, shape or form. When asked for a response to the ‘legal action’ press release, he replied, “my response is that the company should spend less time worrying about me and more time improving the company.”
I asked via Twitter if he regretted anything he wrote, but Finston was defiant.
“Why would I regret that? Would you?” he answered.
Finston says he has sought advice from attorneys, who advised him he has no case to answer to, but he says he will countersue if Easton follows through on its threat.
“If they sue, I will seek damages. Courts have rules that Seeking Alpha is protected opinion. It would be frivolous and a waste for them.”
Finston says the company can prove him wrong by “bringing revenues to their shareholders” and that he has “no interest in their financial loss.”
Finston added, “the only people that have a case are the investors.”
The day started with a
release announcing the company had ‘advanced funds and closed on an agreement’ to invest and purchase a minority ownership interest in AMFIL Technologies and the mPact GROzone Antimicrobial Systems product line.
The release said the GROzone product had, “been designed and is currently in the process of being integrated into a commercially licensed, state of the art medical marijuana grow facility in Colorado.”
It continued, “This facility is one of Colorado's premier Medical Marijuana organizations with an 18,000 sq. ft. indoor hydroponic growing area as well as a 26,000 sq. ft. greenhouse facility that is currently under expansion to 56,000 sq. ft. with a completion date in July 2014.”
The company later clarified that it wasn’t buying into the grow facility, or anything else in Colorado, stating “Through the assistance of consultants and its Philadelphia based attorney, Easton previously signed LOI's and were in negotiations for various medical marijuana initiatives in the State Of Colorado and other states. The Colorado initiatives have since been abandoned for various reasons including the fact medical marijuana is still federally illegal which would cause legal issues for a public company who is involved in growops.”
Easton stock dropped 11.56% on the day, and is down some 70% since March.
All of which makes it clear that Easton Pharmaceuticals is a professional, well run company with strong direction and substantial upside.
(don’t sue me, m'kay?)
--Chris Parry
https://www.twitter.com/chrisparry