One more time around: I’ll begin by stating
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Posted On: 12/21/2017 5:12:50 PM
One more time around:
I’ll begin by stating the obvious. Tuesday's news is not news at all, but rather a restatement of a previously filed and published Form 8K. Nearly everyone on all of the message boards had been aware of this since it first came to light on December 15th. It’s interesting, however, how many consider this breaking news. It’s really quite obvious and will result in a short term bounce that will prove inconsequential in the long run.
Now, I will address the 8K and the FACTS stated therein. Many shareholders, who are underwater on RMHB, want very badly to make something out of the 8K that just isn’t supported by written word. The 8K reported a Master Manufacturer Agreement, not a distribution agreement. This is not a subtle distinction, but it is one that some choose to ignore in favor of a narrative that paints a picture of huge exposure and revenues.
The Master Manufacturer Agreement will have CBD Alimentos SA de CV (hereinafter Alimentos) pay for and thereby own privately labeled beverages provided by RMHB. Neither Alimentos nor RMHB has, as yet revealed what the product will be called, but it clearly will not be a RMHB branded product. Alimentos will have complete control and final say over product formula, flavor and ingredients. Alimentos will then distribute their own product, not an RMHB product.
RMHB, under terms of the agreement, is required to establish and maintain a segregated separate operating account for the Master Manufacturing Agreement. RMHB will have authority to disburse funds from the account to vendors, suppliers, co-packers and the company (RMHB) “solely for the purposes of production and the company’s margin on the sale”. So, in other words, RMHB is acting as a cash conduit of Alimentos to facilitate the manufacturing of an Alimentos product. For this, they will receive revenues of .05 per can. For RMHB to declare either $3.6 million or $7.2 million as a potential revenue stream is wholly misleading as they have no opportunity to profit from the sale of the product through cost controls or adjustments to the retail price point. And, there will be no RMHB brand exposure. They are being paid a nickel per can, period. That is their true revenue stream.
The test for RMHB is multi-faceted. Will the nickel per can revenue stream, together with the sale of stock from the Equity Funding Agreement provide sufficient capital for the re-launch of their own reformulated and re-branded product by the proposed February date? Can the $400K true Master Manufacturer Agreement revenue stream (8 million cans X .05) offset the massive ongoing dilution? Can they slow the growth of shareholder deficit and get to a point where they effectively market the re-branded products? They have a long and arduous path ahead. There will be no shareholder wealth created in the next year. Some will effectively and profitably trade the stock, but most longs will continue to be disappointed.
I’ll begin by stating the obvious. Tuesday's news is not news at all, but rather a restatement of a previously filed and published Form 8K. Nearly everyone on all of the message boards had been aware of this since it first came to light on December 15th. It’s interesting, however, how many consider this breaking news. It’s really quite obvious and will result in a short term bounce that will prove inconsequential in the long run.
Now, I will address the 8K and the FACTS stated therein. Many shareholders, who are underwater on RMHB, want very badly to make something out of the 8K that just isn’t supported by written word. The 8K reported a Master Manufacturer Agreement, not a distribution agreement. This is not a subtle distinction, but it is one that some choose to ignore in favor of a narrative that paints a picture of huge exposure and revenues.
The Master Manufacturer Agreement will have CBD Alimentos SA de CV (hereinafter Alimentos) pay for and thereby own privately labeled beverages provided by RMHB. Neither Alimentos nor RMHB has, as yet revealed what the product will be called, but it clearly will not be a RMHB branded product. Alimentos will have complete control and final say over product formula, flavor and ingredients. Alimentos will then distribute their own product, not an RMHB product.
RMHB, under terms of the agreement, is required to establish and maintain a segregated separate operating account for the Master Manufacturing Agreement. RMHB will have authority to disburse funds from the account to vendors, suppliers, co-packers and the company (RMHB) “solely for the purposes of production and the company’s margin on the sale”. So, in other words, RMHB is acting as a cash conduit of Alimentos to facilitate the manufacturing of an Alimentos product. For this, they will receive revenues of .05 per can. For RMHB to declare either $3.6 million or $7.2 million as a potential revenue stream is wholly misleading as they have no opportunity to profit from the sale of the product through cost controls or adjustments to the retail price point. And, there will be no RMHB brand exposure. They are being paid a nickel per can, period. That is their true revenue stream.
The test for RMHB is multi-faceted. Will the nickel per can revenue stream, together with the sale of stock from the Equity Funding Agreement provide sufficient capital for the re-launch of their own reformulated and re-branded product by the proposed February date? Can the $400K true Master Manufacturer Agreement revenue stream (8 million cans X .05) offset the massive ongoing dilution? Can they slow the growth of shareholder deficit and get to a point where they effectively market the re-branded products? They have a long and arduous path ahead. There will be no shareholder wealth created in the next year. Some will effectively and profitably trade the stock, but most longs will continue to be disappointed.
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(8)Rocky Mountain High Brands, Inc. (RMHB) Stock Research Links
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