Georgi Kamburov


by Georgi Kamburov September 15, 2015

For the last five sessions the stock of TOTALLY HEMP CRAZY (OTCMKTS:THCZ, THCZ message board) has been sliding down the chart. The daily losses were minimal but yesterday the company suffered a more sizable correction wiping 8.2% of its value and closing at $0.067 per share. 4.53 million shares, more than twice the monthly average volume for the ticker, changed hands throughout the session.

Earlier this year THCZ launched their Rocky Mountain High line of hemp infused beverages causing investors to go into a buying frenzy. As a result of all the excitement the stock of the company was propelled upwards and from around 1 cent at the end of January it reached a high of 32 cents in March and 31 cents in April. If you bought in at those prices, however, your investment may have shrunk by 79% by now. Even at the current market price the market cap of the company of close to $27 million may be viewed as somewhat inflated. According to the annual report as of June 30 THCZ had:

• $95.6 thousand cash
• $1 million total current assets
• $1.53 million total current liabilities
• $798 thousand annual revenue
• $408 thousand annual net loss

Nearly the entire amount of the reported revenues was generated in the last quarter of the fiscal year and with the company continuing to expand its operations by adding new distributors for the U.S. as well as signing international distribution agreements with Canada and Southeast Asia the next financial report is expected to show even better results.

There are some serious red flags though. THCZ has a massive amount of convertible debt - $1.5 million in convertible notes as of June 30. The resulting dilution of the common stock has been equally as alarming. Just for the first half of 2015 approximately 105 million shares have been issued. Out of that amount around 78.7 million came into existence as a conversion of notes. In a recent PR Mr. Jerry Grisaffi, Founder of THCZ, stated that through internal cash generated they were able to retire $197 thousand of debt before it could be converted .

If THCZ continue to improve their debt structure without allowing too many shares to be issued they could manage to stabilize the performance of their stock. Not to mention that later this month a shareholder meeting will be held during which new products that should be launched soon are going to be presented. The audited financials for the company's fiscal 2014 and 2015 are also expected to be released prior to the shareholder meeting.

The company is moving forwards with its business and in order to align the corporate brand with the product brand THCZ is going to change its name to Rocky Mountain High Brands, Inc. The current trading ticker is also going to be changed. Still, even if you believe in the potential of the beverages offered by THCZ the volatility of their stock should not be underestimated. Do your own due diligence and adjust your trades accordingly. 

Comments 1

1. Guest
October 14, 2015, 07:35AM

Quotes Remaining silent when things are good, or at least steady, and then writing a big article when the stock drops is not enlightening. The same can be done for any stock on any level, even more so for micro-caps on OTC. Any pretense of balance requires some writings about maintaining a consistent price per share, which often occurs prior to any upward movement. When do we get that article?

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