Seeking Alpha

Reviews Of 15 Marijuana Stocks Before The Marijuana Investor Summit - Part IX

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Includes: CGC, DPWW, HERTF, RMHB, SIPC, SLNX, SPRWF, SRNA, STEV, TAUG, THXBY, TRTC, TURV, UAMM, USEI
by: Anthony Cataldo
Summary

This is the ninth of a 10-part series, to be completed and submitted for Seeking Alpha editorial consideration.

Timing is important - the Marijuana Investor Summit will be held in Colorado from April 20 through April 22, 2015.

Expect an increase in marijuana sector news releases leading up to, during, and after this event.

The Marijuana Business Conference and Expo will follow the Marijuana Investor Summit, less than 1 month later, on May 19-21, 2015.

I began collecting data for this series on March 27, 2015, and hope you find the series helpful in your MJ sector investment decision-making process.

[This ninth installment includes an Appendix, originally produced on April 1, 2015, but not published. It focuses on Totally Hemp Crazy, a stock described in this installment, and provides a methodology that you might find interesting and useful when examining stocks with multiple news releases and the impact they have on the firm's stock price.]

Part I of this series is available here. The below introductory section is repeated for all parts. It can be skipped if you read any earlier part of this series, but is included for completeness and for those who have not read and digested earlier installments.

Important Upcoming Event Dates

The Marijuana Investor Summit is scheduled for April 20, 2015, in Colorado.

It will be followed by the Marijuana Business Conference & Expo on May 19-21, 2015, in Chicago.

All 10 Parts of This Series Will Continue to Follow the Following Format:

  1. First, the firm's name, ticker symbol, and state of incorporation are provided. Recall that more than 50% of the marijuana sector firms accessing capital in the U.S. capital markets are incorporated in and are subject to Nevada corporate law. This is a disproportionately large percentage for the marijuana sector, since only a bit above 8% of the overall "market for corporate law" has been captured by the state of Nevada.
  2. Second, I include the firm's logo and 2-year chart developed from the OTCMarkets website on March 28, 2015. I have captured this long-term trend, and identify and note the relatively high price per share event date if it occurred during the February-March-April 2014 period and surrounded the March 21, 2014 event date, when the index of marijuana stocks peaked (See Note the Seasonal Patterns, below).
  3. Third, I provide a link to the firm's website, their business description (in the firm's own words, to the extent practicable), working capital position, as provided in their latest, publicly available financials, with some significant fundamentals that I recommend you focus on before investing in the firm or its securities.
  4. Finally, the firm's 1-month chart, developed and linked to the Seeking Alpha website, where relevant, fundamentals-based articles might be identified and read to "tool up" and decide whether or not you are interested in buying and holding securities from firms in this emerging sector of the U.S. economy, is provided.

Note the Seasonal Patterns

The chart below captures a 2-year trend for the MJIC Marijuana Global Composite Index. Note the relative seasonal lows occurring at year-end and during December 2013 and December 2014. This pattern is consistent with (1) individual investor tax loss selling for portfolio "losers", followed by (2) recovery and the January effect. The MJIC index peak is consistent with the March 21, 2014 event date, and note that the index value is experiencing a slight upward drift in recent trading days and leading up to the Marijuana Investor Summit, as follows:

... on March 21, 2014, Federal Court Judge Michael Manson granted an application to medical marihuana patients seeking a temporary injunction to retain the right to produce marihuana for personal use until the court renders a judgement on the constitutionality of the MMPR.

Extraordinary stock price increases attract regulatory body attention. The meteoric rise in the MJIC index was followed by a Securities and Exchange Commission trading halt:

An SEC halt of a leading company and a negative Seeking Alpha (emphasis added) article about another led to widespread selling.

Reviews of the 15 marijuana stocks in this ninth installment follow:

#121 - Sipp Industries, Inc. - New (OTCPK:SIPC) is a Nevada corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

Sipp Industries is a conglomerate corporation that specializes in technology, import export and distribution of commercial and consumer products.

The firm enjoyed a high closing price per share of $0.025 on February 24, 2014, and had a positive working capital position on December 2014. There was no current debt, as convertible promissory notes were classified as non-current:

The firm has revenues, a favorable gross margin percentage, and is generating profits.

Below is the 1-month chart from Seeking Alpha:

#122 - Solanbridge Group, Inc. (OTCPK:SLNX) is a Maryland corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

Solanbridge Group Inc. is based in The Woodlands, Texas and is a diversified holding company looking to expand into the medical marijuana industry by developing a commercial grower's license in the Province of Nova Scotia, Canada and developing CBD-infused products in Nevada, California, and Colorado.

The firm has a negative working capital position for September 2014. There are a variety of current liabilities, including promissory notes to related parties and loans from shareholders:

Solanbridge may have an error on its income statements. First, it is customary to have the most recent year's measures on the left side for 2-year comparisons. Second, $23,354 revenues less $17,845 cost of sales should not generate a negative or bracketed measure of $(5,509) (see below):

Below is the 1-month chart from Seeking Alpha:

#123 - Supreme Pharmaceuticals, Inc. (OTCPK:SPRWF), formerly Supreme Resources Ltd. (through March 2014), is a Canadian corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

We are a Canadian-based, publicly traded company seeking to become Canada's leading supplier of affordable medical marijuana.

The firm had a negative working capital position for December 2014. There are no revenues. Some expenses follow:

Canadian firms and financial data are accessed through SEDAR, the Canadian counterpart to the U.S. Securities and Exchange Commission.

Below is the 1-month chart from Seeking Alpha:

#124 - Surna, Inc. (OTCQB:SRNA) is a Nevada corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

The firm had a negative working capital position as of December 2014, with a market capitalization of $16.2 million as of March 31, 2015.

The firm is generating revenues and net losses. The liabilities section of its balance sheet follows:

Below is the 1-month chart from Seeking Alpha:

There are some Seeking Alpha articles on this firm and stock. They can be quickly accessed using the above link.

#125 - Stevia Corporation (OTCPK:STEV) is a Nevada corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

Stevia Corp. is a Farm Management company focused on plantation scale Stevia agronomic solutions that encompass R&D, plant breeding, best growing practices, innovative technologies and commercially viable harvesting.

The firm enjoyed a relatively high closing price per share at $0.3149 per share on April 2, 2014.

Stevia had a significant, positive working capital position as of December 2014, with a market capitalization of $16.4 million on March 31, 2015.

The firm has revenues with a favorable gross margin percentage, and has had some profitable quarters. Positive cash flows are being generated from financing activities:

Below is the 1-month chart from Seeking Alpha:

There are some Seeking Alpha articles on this firm and stock. They can be quickly accessed using the above link.

#126 - Tauriga Sciences, Inc. (OTCPK:TAUG), formerly Immunovative, Inc. (through April 2013), is a Florida corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

The mission of the company is to acquire and build a balanced portfolio of life sciences assets without typical clinical regulatory timelines.

The firm's stock closed at a relatively high price of $0.0998 per share on March 17, 2014.

Tauriga had a negative working capital position as of December 2014, with a market capitalization of $8.1 million on March 31, 2015. The firm is generating favorable gross margin percentages on very modest revenues, and is not profitable.

Convertible notes have been issued, and pay between 5% and 12%. Conversion rates require a minimum price of $0.15 per share, with discounts as high as 25%:

Below is the 1-month chart from Seeking Alpha:

There are some Seeking Alpha articles on this firm and stock. They can be quickly accessed using the above link.

#127 - Totally Hemp Crazy, Inc. (THCZ), formerly Republic of Texas Brands, Inc. (through August 2014), is a Nevada corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

Our hemp products help deliver the healthy punch of vitamins, minerals, proteins, and fats that your body needs at an affordable price, and in a tasty way.

The firm had a negative working capital position as of March 2015, with a market capitalization of $40.7 million on March 31, 2015.

Totally Hemp Crazy had a stock price that first increased, significantly, on March 13, 2014, to close at $0.0259 per share. Positive news releases regarding distribution and sales of its product have resulted in dramatic increases in the firm's stock price.

The firm is generating a modest gross margin percentage from revenues, and has nearly $1.2 million in convertible notes payable, the details of which are not disclosed, as there are no footnotes to the financial statements:

Totally Hemp Crazy has hired a CPA firm to become fully reporting. This is a very good move.

Below is the 1-month chart from Seeking Alpha:

I address this firm and stock in the Appendix at the end of this article.

#128 - Therapix Biosciences, Ltd. (OTCQB:THXBY) is an Israel corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

Therapix Biosciences, a biopharmaceutical Israeli-based company, identifying and accelerating the development of specialty biopharmaceuticals with attractive risk/return profiles.

The firm had a negative working capital position as of September 2014. It has no revenues. Note the below - Ernst & Young is a "Big 4" CPA firm:

Below is the 1-month chart from Seeking Alpha:

#129 - Diego Pellicer Worldwide, Inc. (OTCQB:DPWW), formerly Type 1 Media, Inc. (through March 2015), is a Delaware corporation.

The firm's website can be accessed here. The below is from the website:

Shares were increased by an 11-for-1 split (pay date March 13, 2015).

The firm had a negative working capital position as of December 2014. The firm had revenues and a favorable gross margin percentage, but generated net losses.

Below is the 1-month chart from Seeking Alpha:

#130 - Terra Tech Corporation (OTCQX:TRTC), formerly Private Secretary, Inc. (through February 2012), is a Nevada corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

With a rapidly growing population and diminishing natural resources controlled agriculture is both an effective and necessary technology to sustain and feed our global population. Terra Tech is uniquely poised to capitalize on this growing market.

The firm's high closing stock price was $1.40 on March 12, 2014.

Terra Tech had a negative working capital position as of December 2014, with a market capitalization of $59.5 million on March 31, 2015.

The firm is generating a very small gross margin percentage from revenues. Cash flows are being generated from issuing notes payable and through stock and warrant sales:

Below is the 1-month chart from Seeking Alpha:

There are quite a few Seeking Alpha articles and news releases on this firm and stock. They can be quickly accessed using the above link.

#131 - Two Rivers Water & Farming Company (OTCQB:TURV), formerly Two Rivers Water Company (through March 2013), is a Colorado corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

Building a New Water Paradigm for the Arid Southwest

Two rivers had a negative working capital position as of December 2014, with a market capitalization of $16.4 million on March 31, 2015. The firm is generating a negative gross profit (e.g., cost of goods sold exceed revenues).

Below is the 1-month chart from Seeking Alpha:

There are some Seeking Alpha articles and news releases on this firm and stock. They can be quickly accessed using the above link.

#132 - Tweed Marijuana, Inc. (TWMJF) is a Canadian corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

Tweed Marijuana had a positive working capital position for December 2014, including more than enough cash to pay all debt. The firm is generating revenues, a favorable gross margin percentage, and net losses. Positive cash flows are being generated from financing activities:

Note: Canadian firms and financial data are accessed through SEDAR, the Canadian counterpart to the U.S. Securities and Exchange Commission.

Below is the 1-month chart from Seeking Alpha:

There are some pre-2015 Seeking Alpha articles on this firm and stock, which can be quickly accessed by using the above link.

#133 - UA Multimedia, Inc. (OTCPK:UAMM), formerly JMI Telecom Corporation (through June 2012), is a Delaware corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

We specialize in developing online information and directory portals for various vertical markets.

UA Multimedia had a positive working capital position as of December 2014, with a market capitalization of $570 thousand as of March 31, 2015. The firm had revenues and net income.

Below is the 1-month chart from Seeking Alpha:

#134 - Umbral Energy Corporation (UMBBF), formerly Trijet Mining Corporation (through March 2013), is a Canadian corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

The Company participates, through identification and strategic alliances, for opportunities to increase shareholder value with focus on growth and cash flow.

The firm completed a 1-for-2 share reverse split with a March 8, 2013 pay date, and had a positive working capital position as of January 2015, with a market capitalization of $84 thousand as of March 31, 2015. The firm has no revenues.

Outstanding warrants may be exercised at $0.06-0.10 (Canadian), and outstanding options may be exercised at $0.05-0.06 (Canadian).

Umbral has completed its acquisition of 1005477 BC Ltd. ("1005477 BC"), a holding company which owns 50% of PhyeinMed Inc. ("PhyeinMed") an operating company with a submitted application to Health Canada for an MMPR license.

Note: Canadian firms and financial data are accessed through SEDAR, the Canadian counterpart to the U.S. Securities and Exchange Commission.

Below is the 1-month chart from Seeking Alpha:

#135 - U.S. Energy Initiatives Corporation, Inc. (OTCPK:USEI) is a Nevada corporation. Its 2-year chart follows:

The firm's website can be accessed here. The below is from the website:

U.S. Energy Initiatives Corporation Inc. is a diverse (publicly traded Symbol: USEI) energy firm, that has a long history of developing automotive and hybrid fuel systems and technologies.

The firm enjoyed a high closing stock price of $0.0161 per share on April 1, 2014.

U.S. Energy Initiatives changed its domicile from Delaware to Nevada in April 2013.

The firm did not provide a classified balance sheet, but appears to have had a negative working capital position as of December 2014, with a market capitalization of $1.5 million as of March 31, 2015.

Revenues and net losses are being generated by the firm. Related party and notes payable are producing cash flows to fund operations:

Below is the 1-month chart from Seeking Alpha:

There is at least one Seeking Alpha news release on this firm and stock. It can be easily accessed, using the above link.

Summary

With the single exception of Totally Hemp Crazy (see Appendix), 15 of the stock prices for firms in this installment have been in decline, when viewed in the context of the 2-year chart. In those cases, many purchasing stock in these firms, during the 2-year high, have probably sold the stock and "booked" losses, or remain very disappointed in their investment decision.

The Investor Summit and the Marijuana Business Conference and Expo scheduled for April and May, respectively, are not likely to represent event dates, in and of themselves, that will result in an "economically" significant, positive marijuana sector reaction, but individual firms are likely to make complementary news announcements during this period. Use this article and the series as a source of historical reference to quickly digest these announcements, in context, before making a decision to buy and hold these stocks. You might prefer to set up a portfolio and/or news alerts on the Seeking Alpha website for stocks you find interesting for a long-term buy-and-hold.

As always, read Seeking Alpha comments and consider them as a supplement to this article, where views might be consistent or inconsistent with positions I have taken or described.

Appendix (Written on April 1, 2015): Totally Hemp Crazy Succeeds in Exploiting a Growing Market

  1. The stock price for Totally Hemp Crazy is hitting new highs, where at least 67% of the close-to-close stock price reactions are causally linked to news releases.
  2. With a stock ticker and name that includes THC and for a product that does not contain THC, the firm continues to execute, brilliantly.
  3. Sales of the product are not dependent on state by state marijuana legalization or decriminalization for medical or recreational use.
  4. The Rocky Mountain High brand has a bit of a "bad boy" image, and might allow the product to grow in popularity, and at a premium price per unit.
  5. The Texas distributor announcement was significant, as Texas represents 8.45% of the U.S. population.

The price per share for Totally Hemp Crazy, Inc. [THCZ] stock has increased by approximately 500% since my first Seeking Alpha article on this firm and its stock, published on March 9, 2015 - less than one month ago.

The 1-month chart for THCZ, which went parabolic on April 1, 2015, follows:

Marketing the Product and Stock Through Press Releases

The Product is Already Legal - Everywhere

The name of the product, the name of the firm, and the branding that has already occurred, suggests the appeal of a "bad boy" image, without any legal issues to navigate.

From the firm's website:

At a retail price of $3 per can ($36 for a 12-pack), the "bad boy" branding will succeed. And distribution is not dependent on whether a state has or has not legalized marijuana for recreational or medical purposes:

(Source: Company website)

(Source: Company website)

If Pepsi (NASDAQ:PEP) retails for approximately $0.50 per unit, and the THCZ Rocky Mountain High drinks retail for $3.00 per unit, what will gross or contribution margins be?

(Source: Google any retailer in your area to find lowest retail price for a 24-pack of Pepsi)

Some Very Crude Measures for Gross or Contribution Margin

Let's assume that Rocky Mountain High products can be sold for $2 per unit, instead of $3 per unit (the above or current sales price, which includes shipping and handling). Let's further assume that the Rocky Mountain High product costs $0.50 per unit (the retail sales price at which Pepsi is selling for in the above ad). As I attempt to understate sales or revenues per unit, and attempt to overstate cost of goods sold per unit, I arrive at a gross margin or (if you prefer) contribution margin of $1.50 per unit, as follows:

Sales Price per Unit

$2.00

Cost of Goods Sold per Unit

$0.50

Gross Margin per Unit

$1.50

If you like, modify these measures. Use them to compute the breakeven point for the firm and run some forecasts to determine just how long it will take for the firm to operate debt -free.

Authorized Shares Increased to 600 Million Shares and Valuation

THCZ recently increased its authorized shares to 600 million. The good news is that a reverse split is unlikely in the near term. The bad news is that further dilution is likely. It is impressive to note that the stock price per share and firm's market capitalization continues to increase, even with this dilution.

Forbes places a brand value of $7.5 billion on Red Bull, the privately held firm:

While the branding process for Totally Hemp Crazy is in its infancy, the $0.25 per share price for 600 million shares does not appear to be terribly unreasonable. No doubt, the market is anticipating more positive news, and this is included in the stock price.

The Texas Distribution Agreement

The state of Texas represents approximately 8.45% of the U.S. population. The April 1, 2015 news of an agreement with a Texas distributor resulted in a very significant, positive market reaction and an increase in the firm's stock price:

Other States to Target for Product Distribution

In terms of population or market, THCZ should target other high percentage-of-the-U.S.-population states, as follows:

U.S.

California

12.17%

Texas

8.45%

Florida

6.24%

New York

6.19%

Marketing the Product and Stock through Press Releases

Publicly traded firms file 10-Ks and 1-Qs with the Securities and Exchange Commission, but also provide Annual Reports to market the firm's stock. Large firms are followed by analysts; small or micro caps are not followed by analysts. Therefore, the small or microcap uses alternative vehicles not available to them, including stock promoters or press releases.

Think of large caps or large firms as being "branded" financial products (a premium is built into the price per share). Think of micro caps or penny stocks as being "generic" or not branded (a premium is not built into the price per share). If you have ever shopped at a "dollar store," you understand, very clearly, the cost of branding, as you have purchased some non-branded products to achieve cost savings.

Totally Hemp Crazy is a penny stock, and because it is not followed by financial analysts, it is reasonable to permit the firm to use legal alternatives to promote both its stock price and product. In this case, the firm is using frequent press releases to assist it in adjusting the stock price from its non-branded or generic price per share to a branded price per share, which contains some or all of the premium that should be valued by consumers of financial vehicles (i.e., equity securities).

The Raw Data: N = 18 Trading Days

Using the press releases, below, I ran some very simple regression equations to determine to what extent the press releases might be causally linked to close-to-close price per share and trading volume measures for Totally Hemp Crazy. This data was developed using the OTCMarkets website. Note that there are N=7 separate press releases, as follows:

The March 12, 19 and 24 news releases, all dealing with Amazon.com availability, are categorized as News1. The March 25 announcement relates to the NORML event, is categorized as News2. The March 27 announcement, relating to the second production run, is categorized as News3. The April 1 Texas-based distribution agreement is categorized as News4. And, the Dr Pepper (DPS) disclaimer, which I would characterize as negative news, is classified as News5.

Amazon

Production

Distribution

Disclaimer

Date

Volume

Adj Close*

News1

News2

News3

News4

News5

9-Mar-15

19,047,400

$0.0599

0

0

0

0

0

10-Mar-15

22,708,300

$0.0710

0

0

0

0

0

11-Mar-15

17,835,000

$0.0670

0

0

0

0

0

12-Mar-15

8,844,300

$0.0664

1

0

0

0

0

13-Mar-15

4,668,000

$0.0692

0

0

0

0

0

16-Mar-15

6,204,900

$0.0676

0

0

0

0

0

17-Mar-15

4,765,400

$0.0625

0

0

0

0

0

18-Mar-15

26,987,500

$0.0510

0

0

0

0

0

19-Mar-15

13,171,200

$0.0630

1

0

0

0

0

20-Mar-15

15,363,900

$0.0800

0

0

0

0

0

23-Mar-15

22,538,200

$0.0805

0

0

0

0

0

24-Mar-15

62,575,700

$0.1070

1

0

0

0

0

25-Mar-15

42,674,100

$0.1335

0

1

0

0

0

26-Mar-15

24,959,300

$0.1280

0

0

0

0

0

27-Mar-15

26,517,600

$0.1392

0

0

1

0

0

30-Mar-15

27,773,270

$0.1676

0

0

0

0

-1

31-Mar-15

21,144,090

$0.1751

0

0

0

0

0

1-Apr-15

46,747,390

$0.2931

0

0

0

1

0

All press releases are characterized as positive news, where I use "1" if present and "0" if absent. The Dr Pepper disclaimer is characterized as negative news, where I use "-1" if present and "0" if absent.

Testing News Events against Volume

The first regression equation tests volume as the dependent variable against all event date-based dummy variables (e.g., 1, 0 or -1). About 11.5% of the volume is dependent on the news event dates. The most significant observation was News4.

Regression Analysis: Volume versus News1, News2, News3, News4, News5

The regression equation is:

Volume = 16929272 + 11267795 News1 + 25744828 News2 + 9588328 News3

+ 29818118 News4 - 10843998 News5

Predictor Coef SE Coef T P

Constant 16929272 4309552 3.93 0.002

News1 11267795 9309697 1.21 0.249

News2 25744828 14928727 1.72 0.110

News3 9588328 14928727 0.64 0.533

News4 29818118 14928727 2.00 0.069

News5 -10843998 14928727 -0.73 0.482

S = 14293168 R-Sq = 37.5% R-Sq(adj) = 11.5%

Testing News Events against Closing Price per Share

The second regression equation tests closing price per share against the same independent variables used for volume. About 67.5% of the close-to-close price per share can be explained by the 5 classifications of n=7 news events or observations. The most significant observation was News4, followed by News 5.

Regression Analysis: Adj Close* versus News1, News2, News3, News4, News5

The regression equation is:

Adj Close* = 0.0829 - 0.0041 News1 + 0.0506 News2 + 0.0563 News3 + 0.210 News4

- 0.0847 News5

Predictor Coef SE Coef T P

Constant 0.08289 0.01049 7.90 0.000

News1 -0.00409 0.02266 -0.18 0.860

News2 0.05061 0.03634 1.39 0.189

News3 0.05631 0.03634 1.55 0.147

News4 0.21021 0.03634 5.78 0.000

News5 -0.08471 0.03634 -2.33 0.038

S = 0.0347930 R-Sq = 77.0% R-Sq(adj) = 67.5%

Adding Volume as an Independent Variable

While generally not done, I include volume as an additional independent variable. I get a bit more explanatory power, at 69.8%, but the volume measure, per se, is not statistically significant.

Regression Analysis: Adj Close* versus News1, News2,...

The regression equation is

Adj Close* = 0.0669 - 0.0147 News1 + 0.0263 News2 + 0.0473 News3 + 0.182 News4

- 0.0745 News5 + 0.000000 Volume

Predictor Coef SE Coef T P

Constant 0.06690 0.01527 4.38 0.001

News1 -0.01474 0.02311 -0.64 0.537

News2 0.02629 0.03908 0.67 0.515

News3 0.04725 0.03558 1.33 0.211

News4 0.18204 0.04038 4.51 0.001

News5 -0.07446 0.03574 -2.08 0.061

Volume 0.00000000 0.00000000 1.40 0.190

S = 0.0334913 R-Sq = 80.5% R-Sq(adj) = 69.8%

Some Conclusions and Strategic Considerations

Totally Hemp Crazy is executing brilliantly! The company is providing a steady stream of news releases to market and brand its product and the stock. The stock price is rising, and the Texas distribution agreement is excellent news. Even better news would be similar distribution agreements for California, Florida and New York.

It is likely to be preferable to purchase this stock during periods of news "drought," and sell some holdings into news-based rallies to reduce your cost in this stock for a long-term hold. Effectively, this is a trading stock, but the best dat trades are those stock you are not afraid to buy and hold long-term. At this point in time, I would be likely to buy below $0.20 and/or place good-till-cancelled orders to buy below the bid.

I also like this stock as a long-term hold, perhaps in hopes of a buyout offer at some future point in time, but again, will day-trade the overreactions to reduce or eliminate the cost of my holdings. It is a rare occasion when news releases result in stock price per share reactions that can explain more than 60% of the stock price movement. This is one of the best cases of "sell on news" that I have ever seen.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.