Blackcraft Cult Inc. opposes organized religion, but it sure likes the stock market.
The Anaheim-based apparel maker last week reported a miraculous market capitalization of $398 million, even though it had only $2 million in sales and no profit per share in 2015.
The company is so unconventional that the phone number it files with the Securities and Exchange Commission is out of order.
“We like to stay off the grid,” said a manager at the company’s warehouse in Anaheim during a visit last week. “We do everything on the internet.”
Blackcraft Cult is one of more than 50 companies based in Orange County that are traded over the counter, also known as OTC or the Pink Sheets. Some of them have memorable names, such as The Grilled Cheese Truck Inc., a Newport Beach-based operator of 10 food trucks that sell gourmet grilled cheese, or consulting firm SweeGen Inc., a Rancho Santa Margarita-based company that acknowledges it has no employees.
‘Risky’ Business
“Companies quoted on OTC Link can be among the most risky investments,” says an SEC webpage. “That’s why you should take extra care to thoroughly research any company quoted exclusively on OTC Link.”
The SEC permits almost any firm to trade as long as it fills out the proper paperwork. By some estimates, there are more than 3,000 companies trading over-the-counter. Most OTC issuers don’t meet minimum requirements for the New York Stock Exchange or the NASDAQ Stock Market.
The OC-based companies usually have one of two things in common: Their shares don’t trade at all, or they trade in the hundredths of a penny.
For example, Costa Mesa-based Eventure Interactive Inc., which claims to make social apps, has the largest daily volume of any OC-based OTC company—38 million shares on average. Each share is worth 0.0001, or one thousandth of a penny.
Unique Vision
Blackcraft Cult, which has the biggest OTC market cap in Orange County, traded on only three days in the past year, and each time a few hundred shares were exchanged for $2 each.
It’s not your typical Wall Street investment.
“The Blackcraft lifestyle apparel brand (is) rooted in the ideal of self-realization being superior to religious indoctrination and other society enforced norms,” said the company’s 2015 annual report.
Its apparent affinity for satanism is sprinkled throughout the filing, such as the company being authorized to issue 6,666,600,000 shares.
Founders Bobby Schubenski and Jim Somers “started with a passionate idea, 40 black t-shirts, a few close friends, and $100 in July, 2012.”
The company’s current product line includes hats, T-shirts, leggings and accessories. It generally ships 80 to 100 packages per day and employs five full-time people, Blackcraft says.
The company targets people with tattoos and teens in the “low to middle-classes,” its filing said. At the company’s 11,000-square-foot facility in Anaheim, boxes covered the floor, and the company’s Grim Reaper logo was plastered over one wall. The annual report called the facility its “flagship store,” but there was no signage on the outside. The founders didn’t return messages by press time.
Schubenski, who was 26 at the time of last year’s filing, is both chief executive and chief financial officer. Somers, 35 last year, is president and director.
In 2014, the share count ballooned from 148 million to 199 million. Each co-founder now owns 78.7 million shares, which in theory is worth $156.4 million.
The owners haven’t been trading their shares. In reality, higher trading volume should reveal a more accurate price. Their filing, though, includes a warning about the risk of increased volume.
“When a limited number of shares begin trading, the price per share is subject to volatility and may be subject to rapid price swings in the future.”
