looking for a play in this one next week

Greycloak Technology Inc. (GRCK) in a joint press release with OTC Markets group upgraded their listing from Pink Open Market to OTCQB Venture Market effective immediately.  At the time of this article the stock is up 12% on volume of 7.5 mil shares.  In order to get the upgrade the company had to trade at over .01 for 30 consecutive days.  With this upgrade is greater transparency for investors and that essentially reduces the investor’s risk.  This also means that their financials have to be audited but what is interesting with GRCK is that they have been SEC full reporting for over 2 years which should give investors an additional layer of confidence.

On October 7, 2017 the company stated that they anticipated “completing the acquisition of Equova within the next 15 days upon the successful completion of due diligence and final acquisition agreements.” This put the merger news due out for release by Monday October 23.  If news breaks by Monday this will undoubtedly breathe new investor life into the company as the company performs according to its guidance.  Follow up and credibility is a noteworthy attribute in an emerging company.

The Team of Patrick Stiles and Matthew Grabau is uniquely focused on growing hemp oil sales in an industry they know well.  Both have a nutraceutical background and are well positioned with their existing network to build a sales team and grow sales.  Earlier this month they exhibited at Denver’s Integrative Medicine Summit and indicated that the medical practitioner market was viable and that they have the right product at the right time.  Medical professionals will want Full Spectrum Hemp Oil and want something with a consistent label and in line with FDA compliance.  The solution Eqova brings to the table fills a noticeable void in the market.

At the time of the last filing there were approximately $350,000 in convertible notes.  Given the recent trading volume and the expansion of share count it is reasonable to conclude that the dilution is done or winding down.  As of October 16, 2017 the outstanding share count was 93,266,186 which is very close to reflecting an end to the convertible notes if one were to look at the share expansion the trading volume and price of conversion.

The technicals on the stock are very strong.  There has been a noticeable change in volume since the announcement of the acquisition indicating renewed investor interest.  The stock retested support and rebounded nicely and followed through with volume.  The next level of resistance is at .017 and it seems poised to break that either today or on the acquisition news.  After a breach of resistance the next level seems to be .03.  From the recent high of .03 the stock dropped a hair over the 61.8% Fibonacci retracement level and held on very good volume.  This bodes well for a retest of .03.


With any new company there are risks.  The biggest risk is dilution, but looking at the numbers this issue seems to be behind them.  The risk of selling CBD is nominal since the company is only selling hemp oil with less than a .3% concentration of THC.  Execution risk is very high but this team has such a wealth of experience in nutraceuticals they would likely be tapping the same contact just selling a product that is in more demand.  At this time investors don’t know the terms of the merger or how dilutive it might be, but based on their roll out and methodical due diligence process it seems reasonable that management will be focused on the long term viability of the company.

This move to the QB demonstrates a commitment to grow the company. With a solid and seasoned management team in place more meaningful updates seem in the works in terms of the growth in sales and the number of sales reps.  If the Company closes on the Eqova acquisition by Monday it will boost the management’s credibility to showcase their ability to execute on their business model.  It also follows that the structure of the deal will be revealing management’s incentives.  The recent trade show seemed to validate the model so the market will be watching for the roll-out strategy and guidance.  The Hemp Oil market is expected to reach $2.1 billion by 2020 so if this company focuses on dominating this niche market there could be considerable upside.