American Cannabis Company Inc (AMMJ)

[Fallingknife75]

For those who haven't read the Q2 filing, here is a breakdown along with some chart analysis.

The Q2 report was unsurprising. The company has roughly $960k of Cash and Equivalents, Receivables and Deposits, while their Total Debt is roughly $393k. $30k of their debt is Stock Payable, but there are no other dilutive instruments, convertible notes etc. Revenues for the quarter were $550k vs $731k in the same quarter last year. Gross Margins were 43% vs 68% last year, this is due to a significant change in the mix of Consulting Revenue vs Product Equipment Revenue. Net Loss was $102k vs Net Profits of $172k last year. The Outstanding Shares increased by 5% to 54.2m. Of that O/S, Officers and Directors own nearly 24m shares, the Float is roughly 31m shares.

The Year over Year comparison is a tough measure, considering the huge difference in the economy etc. between the two. A sequential comparison, Q1 vs Q2, shows actual improvement. Revenues improved from $440k to $550k, while the Net Loss went from $177k to $102k.

I don’t often look at valuations for OTC stocks, but AMMJ has an interesting anomaly. The current Market Capitalization of the company (Outstanding Shares x Share price) is $6m; what the whole company is valued at. However, they have an available loan facility of up to $7.5m. So, they are currently valued at less than the money they can borrow, I find that somewhat comical.

Using a three-year weekly chart, the Long-term downtrend is fairly obvious, however a support range between .085 and .10 has been established this year. It also temporarily broke the 50wma for the first time in three years. The RSI is a bit low at 42, and there are signs of a 20/50wma Golden Cross setting up, but it has a bit to go. The two Moving Averages will provide resistance from .14 - .16, with key resistance after that being .20 - .22. The MACD has been divergent from the share price for two years, and recently touched the Center-line for the first time in more than that; I see this as very positive. The drop in the OBV is less than the share price would indicate, I see this as a positive as well.

http://schrts.co/wgYbFDyk

Switching to a six-month daily chart, the RSI is fairly low at 41. There was a 50/200dma Golden Cross in June which is about to turn to a Death Cross, due to the recent price declines. The Resistance around .14 is fairly obvious. Support at .10 has been established, however there has not been a significant volume test of it. The MACD has had a Bullish Signal Line Crossover, but remains below the Center-line. The OBV seems appropriate for the price action.

http://schrts.co/hgMhIhed

Some of the recent downward pressure on the price has been caused by a large shareholder, Mr. Hollister, making what appear to be planned sales, he does this every 3-4 month for roughly 500k shares. The last of his sales were a month ago, so I expect him to be done until Oct – Nov. Also, in June the company tapped some of its credit line and issued 250k shares to White Lion Capital. There are no sales restrictions that I am aware of, so it is possible they sold them into the market as well.

See Form 4's for Mr. Hollister's sales,

https://www.otcmarkets.com/stock/AMMJ/disclosure

AMMJ has some work to do, but they are financially strong and the share dilution is minimal; something most companies in the industry can only dream of.

All the best,

Knife