November 15th is the deadline for filing their 10Q
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Posted On: 11/01/2017 4:15:11 PM
November 15th is the deadline for filing their 10Q quarterly report for the 1st qtr., fiscal year 2018. I expect it to be dismal and dreary showing a continued erosion of sales. Longs will say, "not to worry", "this was expected", "just wait for the re-launch". I say, if they can't sell the product they have now, how can we expect them to sell product in a new can? Bottom line, the quarterly report will have a negative impact on pps regardless of the distractions being presented.
The financing package is for a total of $250,000 and is referred to as debt financing. None of this money will ever be used to advance the company efforts to develop and produce a new line of products. This $250K simply keeps the doors open...for a while. Further, GHS Investments will begin converting that note into common shares at the earliest possible juncture so as to sell them into the retail market, mitigating their $250K out of pocket risk exposure.
As far as the $12,000,000 cash infusion goes, that's not financing at all, but rather an Equity Funding Agreement (EFA) whereby GHS Investments has agreed to purchase up 12 million dollars of common shares of RMHB stock. Each tranche of this EFA will be initiated by the issuance of a put notice to GHS. These put notices can never be for an amount greater than $400,000, nor can they be for an amount greater than 2 times the ten day average daily trading dollar volume. Right now they could only issue a Put Notice for $150,000 due to the dollar volume constraint. Also, there must be 10 days between each tranche of the EFA. In any case, let's call this EFA what it truly is...a stock selling plan that will burden the price action with a lot of selling pressure.
GHS also paid $1 million to Roy Meadows for the rights to the Meadows Note with regard to the $1,107,606 principal balance, together with his security interest granted thereunder. GHS then exchanged those rights for a Secured Promissory Note in the amount $1,107,606.00. The new note is due in 9 months, bears 10% interest and can be converted to common stock at a 37% discount.
My further opinions:
1. Dilution will be steady and ongoing for the foreseeable future. Even at maximum Put Notices of $400K spaced every 10 days, it will take over a year to complete the 12 million dollar equity funding. While GHS will be acquiring the stock at a 20% discount, they will be selling it into the retail market as fast as they can, as they cannot hold more than 4.99% of the outstanding shares and they have a real desire to manage their risk exposure. This deal could end up being a real money maker for GHS if they can sell the shares. Unfortunately, their success means a lot of ongoing dilution that will NOT be offset by speculative PR's or new hires. RMHB needs to get a product to market and start generating quantifiable revenues to soften the effect of dilution. Even then, there is the exchange note ($1,107,606.00) which is convertible at a 37% discount for further dilution.
2. In the early months of initiating the EFA, the available funds will be limited due to the constraint of the average daily trading dollar volume. This will impact the speed with which RMHB can develop, produce and bring to market the proposed new product line. Personally, I don't think they will have enough money to accomplish everything needed to be ready for a re-launch anytime before April, 2018 at best.
3. When the pps drops, and it will, the $.01 OTCQB test will be challenged. The effect of losing their OTCQB certification would cause the pps to fall yet further.
4. If GHS is unable to sell the shares rapidly enough to manage their risk exposure, the EFA will unravel leaving RMHB in a real lurch as they attempt a turnaround.
5. Don't kid yourself. The coming dilution, the extended timing for a re-launch, the expected challenge to the OTC certification and the tenuous nature of the Equity Funding Agreement individually pose great risk to the shareholders. Taken together they are downright scary.
6. There are many longs who are upside down on RMHB and they will grab onto any glimmer of hope to pump the stock. Be wary of their certainty, for at this point, the only thing certain is that the pps is going down. I think we could see .002 but I think I'll start buying at .008 and accumulate in larger volume stages going down. I will then sell enough starting at .01>.015 to make shares I continue to hold "free". Example: Accumulating 20 million shares at an average .004 per share would require selling 8 million shares at .01 to make the remaining 12 million shares "free".
Any of these opinions are subject to change as the situation right now is quite fluid. You can disagree of course. If you do, however, please offer a cogent, logical argument for your position and we can remain friendly.
The financing package is for a total of $250,000 and is referred to as debt financing. None of this money will ever be used to advance the company efforts to develop and produce a new line of products. This $250K simply keeps the doors open...for a while. Further, GHS Investments will begin converting that note into common shares at the earliest possible juncture so as to sell them into the retail market, mitigating their $250K out of pocket risk exposure.
As far as the $12,000,000 cash infusion goes, that's not financing at all, but rather an Equity Funding Agreement (EFA) whereby GHS Investments has agreed to purchase up 12 million dollars of common shares of RMHB stock. Each tranche of this EFA will be initiated by the issuance of a put notice to GHS. These put notices can never be for an amount greater than $400,000, nor can they be for an amount greater than 2 times the ten day average daily trading dollar volume. Right now they could only issue a Put Notice for $150,000 due to the dollar volume constraint. Also, there must be 10 days between each tranche of the EFA. In any case, let's call this EFA what it truly is...a stock selling plan that will burden the price action with a lot of selling pressure.
GHS also paid $1 million to Roy Meadows for the rights to the Meadows Note with regard to the $1,107,606 principal balance, together with his security interest granted thereunder. GHS then exchanged those rights for a Secured Promissory Note in the amount $1,107,606.00. The new note is due in 9 months, bears 10% interest and can be converted to common stock at a 37% discount.
My further opinions:
1. Dilution will be steady and ongoing for the foreseeable future. Even at maximum Put Notices of $400K spaced every 10 days, it will take over a year to complete the 12 million dollar equity funding. While GHS will be acquiring the stock at a 20% discount, they will be selling it into the retail market as fast as they can, as they cannot hold more than 4.99% of the outstanding shares and they have a real desire to manage their risk exposure. This deal could end up being a real money maker for GHS if they can sell the shares. Unfortunately, their success means a lot of ongoing dilution that will NOT be offset by speculative PR's or new hires. RMHB needs to get a product to market and start generating quantifiable revenues to soften the effect of dilution. Even then, there is the exchange note ($1,107,606.00) which is convertible at a 37% discount for further dilution.
2. In the early months of initiating the EFA, the available funds will be limited due to the constraint of the average daily trading dollar volume. This will impact the speed with which RMHB can develop, produce and bring to market the proposed new product line. Personally, I don't think they will have enough money to accomplish everything needed to be ready for a re-launch anytime before April, 2018 at best.
3. When the pps drops, and it will, the $.01 OTCQB test will be challenged. The effect of losing their OTCQB certification would cause the pps to fall yet further.
4. If GHS is unable to sell the shares rapidly enough to manage their risk exposure, the EFA will unravel leaving RMHB in a real lurch as they attempt a turnaround.
5. Don't kid yourself. The coming dilution, the extended timing for a re-launch, the expected challenge to the OTC certification and the tenuous nature of the Equity Funding Agreement individually pose great risk to the shareholders. Taken together they are downright scary.
6. There are many longs who are upside down on RMHB and they will grab onto any glimmer of hope to pump the stock. Be wary of their certainty, for at this point, the only thing certain is that the pps is going down. I think we could see .002 but I think I'll start buying at .008 and accumulate in larger volume stages going down. I will then sell enough starting at .01>.015 to make shares I continue to hold "free". Example: Accumulating 20 million shares at an average .004 per share would require selling 8 million shares at .01 to make the remaining 12 million shares "free".
Any of these opinions are subject to change as the situation right now is quite fluid. You can disagree of course. If you do, however, please offer a cogent, logical argument for your position and we can remain friendly.
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