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Mighty Move Brewing on Healthier Choices Management Corp. (OTCMKTS: HCMC) As PMI Patent Infringement Lawsuit Gains Traction

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Healthier Choices Management Corp. (OTCMKTS: HCMC) Currently trading several billion shares per day HCMC is looking to break out of its trading range. The stock is among the most exciting stocks in small caps that continues to be the most talked about stocks in small caps with well over 400,000 shareholders of record. Currently under heavy accumulation HCMC is looking to break out of its current trading range and blaze a path along the likes of Enzolytics or Tesoro and break out into a whole new dimension; a break over $0.0065 and its blue skies ahead.  

Microcapdaily first reported on HCMC in January 2021, when the stock was in the low triple zeroes, a fraction of current levels. HCMC is getting noticed as the Company pursues its patent infringement lawsuit against billion-dollar conglomerate Philip Morris USA, Inc. and Philip Morris Products S.A. A settlement or licensing deal could drive HCMC into a whole new stratosphere. The patent infringement lawsuit against Philip Morris USA, Inc. is moving forward and gaining steam. Representing HCMC is Cozen O’Connor ranked among the top 100 law firms in the country and employing more than 775 attorneys in 29 cities across two continents. The firm’s diverse client list includes global Fortune 500 companies, middle-market firms poised for growth, high-profile individuals and HCMC who must have a seriously solid case against PMI with outstanding chances. 

Healthier Choices Management Corp. (OTCMKTS: HCMC) is a U.S based Company providing consumers with healthier alternatives to everyday lifestyle choices. Operating under its wholly owned subsidiaries, Healthy Choice Markets and Healthy Choice Markets 2, the Company owns both Ada’s Natural Market, a 18,000 sq. ft. full-service grocery store serving the Fort Myers, FL, and three (3) Paradise Health & Nutrition locations in the greater Melbourne, FL area. HCMC also operates 8 vape stores across the southeast United States offering smokers an alternative to traditional cigarettes. Operating regionally, through its Vape Store brands, including The Vape Store, Vapor Max, Vulcan Vape, and The Grab Bag locations, the Company’s Vape Stores provide an endless selection of industry best vaping hardware and e-liquids, giving its consumers a way to get their nicotine without the smoke, tar, ash or carbon monoxide found in traditional cigarettes.  HCMC’s patented Q-Cup™ technology is based on a small, quartz cup called the Q-Cup™, which a customer can purchase already filled by a third party in some regions, or can partially fill themselves with either cannabis or CBD concentrate (approximately 50mg), also purchased from a third party.  The Q-Cup™ can then be inserted into the patented Q-Unit™, which heats the cup from the outside without coming in direct contact with the solid concentrate.  This Q-Cup™ and Q-Unit™ technology provides significantly more efficiency and an “on the go” solution for consumers who prefer to vape concentrates either medicinally or recreationally.  The Q-Cup™ can also be used in other devices as a convenient micro-dosing system.  

HCMC is doing over $1 million per month in sales in 2020; Last week HCMC announced its financial results for the three-month period ended March 31, 2021. Net sales from operations amounted to approximately $3.5 million, down 14% from the same period last year; a significant portion of the decline related to last March’s COVID-19 sales surge in the grocery segment. Total operating expenses were $2 million and the Company reported a small net loss. Adjusted EBITDA loss amounted to $394,000, an improvement of approximately 9% when compared to the same period last year.  

The Company is led by a powerhouse management team; the CEO Jeffrey Holman is a seasoned executive and corporate lawyer who also serves as President of Jeffrey E. Holman & Associates, P.A., a South Florida Based law firm. Mr. Hofman was also a partner at Holman, Cohen & Valencia. Christopher Santi, HCMC COO and President is sales executive who served as President of Santi Management Corporation before joining the Company. John Ollet the CFO previously served as Executive Vice President-Finance for Systemax, Inc. (NYSE:SYX) North America Technology Division for 10 years. SYX currently trades at $43 per share on the NYSE and does over a billion dollars in annual revenues.   

HCMC owns a valuable patent portfolio related to both vape technology and also manufacturing processes and procedures for an imitation nicotine product. Most recently, the company formed a wholly owned subsidiary, HCMC Intellectual Property Holdings, LLC, to hold and market its intellectual property assets. This subsidiary will own all of the patents, trademarks and other intellectual property of HCMC and will be utilized in the company’s attempt to monetize its intellectual property.     

The bulk of HCMC $1 million plus in sales per month come from the Company’s chain of Vape Stores across the southeast United States. The 10 Vape Stores have a clear foot hold in the still ever-growing e-cigarette / vaping market and are listed as among the top Vap distributors in the Country.  The Vape Store is made up of regionally branded stores, consisting of our flagship The Vape Store brand, along with Vapor Max, Vulcan Vape, and The Grab Bag store brands.  Selling top rated hardware brands from KangerTech to Aspire, and an endless assortment of premium and house e-liquids, the Vape Store is an endless selection of products to provide users a better alternative to traditional smoking. 

On December 14 HCMC formed a new wholly owned subsidiary to hold, market and expand on its intellectual property assets. This subsidiary, HCMC Intellectual Property Holdings, LLC, will own all of the patents, trademarks and other intellectual property of HCMC. HCMC currently owns a portfolio of patents related to both vape technology and also manufacturing processes and procedures for an imitation nicotine product. HCMC’s focus with this new subsidiary is to invest in innovation and encourage further development of core intellectual property. 

The big story on HCMC is its patent infringement lawsuit against Philip Morris USA, Inc. and Philip Morris Products S.A. in connection with their product known and marketed as “IQOS®.” The lawsuit was filed in the United States District Court for the Northern District of Georgia. The international law firm Cozen O’Connor has been engaged to represent HCMC in this matter. HCMC’s lawsuit includes claims that Phillip Morris is infringing HCMC’s patent rights in connection with IQOS®, an alternative tobacco product marketed and sold by Phillip Morris. Philip Morris claims that it is currently approaching 14 million users of its IQOS® product and has reportedly invested over $3 billion in their smokeless tobacco products. Philip Morris has been very open about their ongoing transition from traditional fully combustible cigarettes to their modified risk tobacco products, including IQOS®. The Philip Morris IQOS® product is currently the subject of two other patent infringement proceedings filed by RJ Reynolds Tobacco Company. One proceeding is before the International Trade Commission and seeks to stop the importation of the IQOS® product into the United States; the other is a patent infringement action currently pending in the Eastern District of Virginia. RJ Reynolds’ patents are unrelated and not affiliated with the patents asserted in the HCMC case.   

In its patent infringement lawsuit against Philip Morris, Cozen O’Connor is representing HCMC; Cozen O’Connor is ranked among the top 100 law firms in the country and employs more than 775 attorneys in 29 cities across two continents. Cozen O’Connor is a full-service firm with nationally recognized practices in litigation, business law, and government relations, and its attorneys have experience operating in all sectors of the economy. The firm’s diverse client list includes global Fortune 500 companies, middle-market firms poised for growth, high-profile individuals and ambitious upstarts like HCMC. Cozen O’Connor has been awarded as the #1 law firm of the year several times, amongst dozens of other awards and would not take on a giant such as Philip Morris unless they knew for sure they have a very strong case and excellent chances. 

Cozen O’Connor has been busy at court on behalf of HCMC; Upcoming events through beginning of May 2021:  

(1) HCMC’s Opposition to PM’s MTD (March 11, 2021): Absent an extension of time to respond, HCMC’s opposition to PM’s MTD is due on or before March 11, 2021. I would expect some form of opposition that includes arguments that (a) dismissal is not warranted because discovery has not happened yet and discovery is needed in order to determine whether combustion is a process that occurs in the accused devices, (b) dismissal is not warranted without a claim construction that construes, amongst other terms, the term “combustion”, and (c) testimony, by way of a declaration, explaining that it is not dispositive, based on the documentary evidence presented by PM’s MTD, that there is no combustion. A well written opposition brief hitting those points will likely result in denial of the MTD. I would also expect that there be a request by HCMC to correct any defects in their complaint, should the court deem there to be any defects. That request is granted liberally and would overcome the MTD for the time being.  

(2) Rule 26(f) Meet and Confer (March 15, 2021): This is held in private between lead counsel for all parties. The parties are required to confer in person in an effort to settle the case, discuss discovery, limit issues, and discuss other matters.  

(3) PM’s Reply to HCMC’s Opposition (March 25, 2021): Absent an extension of time, PM will have the opportunity to reply to HCMC’s opposition brief regarding the MTD.  

(4) Joint Preliminary Report and Discovery Plan (April 12, 2021). Absent an extension of time, the parties will file this report and plan that results from the parties’ Rule 26(f) meeting and conference and sets forth numerous details including, amongst other things, the progress of settlement discussions, a proposed schedule of the case for fact discovery, motion practice, expert discovery, and trial.  

(5) Infringement Contentions (May 12, 2021): HCMC is due to serve contentions showing infringement where HCMC will identify (these are usually exchanged between the parties and not made public or filed publicly with sensitive information redacted): (a) Each claim of each patent in suit that is allegedly infringed by each opposing party; (b) Separately for each asserted claim, each accused apparatus, method, composition or other instrumentality (“Accused Instrumentality”) of each accused party of which the claiming party is aware.

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HCMC

On May 28 HCMC extended the expiration date of its Rights Offering from June 3, 2021 to June 10, 2021. HCMC has received reports that some brokers and custodians established internal “cut-off” dates that were earlier than the Expiration Date that their clients did not know about. Many of our international stockholders, as well as some U.S. stockholders, were informed by their brokers and online trading platforms that they were imposing a cutoff date as early as May 28, 2021 to have successfully submitted subscription forms and payments to participate in HCMC’s Rights Offering. 

Consequently, the HCMC Board of Directors has determined to extend the Expiration Date to allow all stockholders, both international and domestic alike, additional time through June 10, 2021 to exercise their subscription rights. The extension of the Rights Offering does not require that the holders of subscription rights who have already subscribed to purchase shares under the Rights Offering take any action. All other terms and conditions of the Rights Offering remain the same as previously announced. 

The subscription rights are non-transferrable and may only be exercised during the subscription period. The subscription period for the Rights Offering commenced on May 19, 2021. We have extended the Expiration Date for the Rights Offering to 5:00 PM Eastern Time, on Thursday, June 10, 2021. If exercising subscription rights through a broker, dealer, bank or other nominee, or online platform, rights holders should promptly contact their nominee, or online platform, and submit subscription documents and payment for the rights subscribed for in accordance with the instructions and within the time period provided by such nominee, or online platform. The broker, dealer, bank or other nominee will establish a deadline before June 10, 2021, by which instructions to exercise subscription rights, along with the required subscription payment, must be received. Based upon recent occurrences, stockholders who wish to participate in the Rights Offering are urged to contact their broker or online trading platform as soon as possible to confirm their deadline and also to determine whether the broker will be charging a transaction fee. 

Under the Rights Offering, Healthier Choices Management Corp. will distribute one non-transferable subscription right for every four shares of common stock owned and each share of Series D preferred stock (on an as-if-converted-to-common-stock basis) held on the Record Date (May 18, 2021). Each subscription right will entitle the holder to purchase one share of common stock. When filling out the subscription rights form, the holder will use the Estimated Subscription Price, which is $0.001425. This number was calculated by taking the volume weighted average price (also known as the “VWAP”) from the last 5 trading days leading up to the Record date of the Rights Offering, and multiplying that number by 75%, thereby reflecting a 25% discount to that 5 day VWAP. In an effort to ensure that the Actual Subscription Price reflects the most current average weighted price available at the close of the Rights Offering, the Actual Subscription Price will be calculated by taking the VWAP from the last 5 trading days leading up to the termination date of the Rights Offering on June 3, 2021, and multiplying that number by 75%, providing a 25% discount to that 5 day VWAP for all shares purchased. 

The Rights Offering is being made pursuant to the Company’s effective registration statement on Form S-1 (Reg. No. 333-255356) and the prospectus relating to the Rights Offering on file with the Securities and Exchange Commission (“SEC”). Before you invest, you should read the prospectus and other documents the Company has filed with the SEC for more complete information about the Company and the Rights Offering. This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction. Any offer will be made only by means of the prospectus forming a part of the effective registration statement. 

Jeffrey Holman, CEO of HCMC, commented, “We have received significant positive feedback regarding the Rights Offering. In addition, we have received a flood of communications in the last 2 days expressing concerns about stockholders having insufficient time to submit their subscription materials due to the short time frames resulting from submission deadlines set by their brokers, trading platforms and custodians. Accordingly, we have concluded to push back the Expiration Date of the Rights Offering to June 10, 2021 to provide all stockholders additional time to participate.”

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Currently trading several billion shares per day HCMC is looking to break out of its trading range. The stock is among the most exciting stocks in small caps that continues to be the most talked about stocks in small caps with well over 400,000 shareholders of record. Currently under heavy accumulation HCMC is looking to break out of its current trading range and blaze a path along the likes of Enzolytics or Tesoro and break out into a whole new dimension; a break over $0.0065 and its blue skies ahead.  Microcapdaily first reported on HCMC in January 2021, when the stock was in the low triple zeroes, a fraction of current levels. HCMC is getting noticed as the Company pursues its patent infringement lawsuit against billion-dollar conglomerate Philip Morris USA, Inc. and Philip Morris Products S.A. A settlement or licensing deal could drive HCMC into a whole new stratosphere. The patent infringement lawsuit against Philip Morris USA, Inc. is moving forward and gaining steam. Representing HCMC is Cozen O’Connor ranked among the top 100 law firms in the country and employing more than 775 attorneys in 29 cities across two continents. The firm’s diverse client list includes global Fortune 500 companies, middle-market firms poised for growth, high-profile individuals and HCMC who must have a seriously solid case against PMI with outstanding chances. Microcapdaily first reported on HCMC on January 27 as the stock was moving up in the low triple zeroes. We will be updating on HCMC when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with HCMC.

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Disclosure: we hold no position in HCMC either long or short and we have not been compensated for this article.

Media & Technology

Global Tech Industries Group Inc (GTII) rally could be just getting started

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Small-cap stocks have seen a significant increase in the first weeks of January, a trend that is often seen at the start of a new year. This presents an opportunity for investors to capitalize on the surge before it dissipates. The Russell 2000 index, which follows small-cap stocks, has shown a 7.4% increase as of Monday’s close, outperforming the large-cap Russell 1000, which has risen by 5%, and the S&P 500, which has increased by 4.5%.

The “January Effect” rally, where small caps surpass large caps, is a common phenomenon. One such stock that may be benefitting from this January effect is GTII. Global Tech Industries Group Inc (GTII) last traded at $1.86 and closed with double-digit gains of 11.08%.  GTII has a 52-week range of $0.4302 – $8.9700, suggesting a tremendous upside potential from the current levels.

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What caused the surge in GTII share prices?

For the uninitiated,  Global Tech Industries Group, Inc. (OTCQB: GTII) is a Nevada-based public company focused on acquiring cutting-edge technologies. Last week, GTII announced Board appointed Donald Gilbert to lead a newly created task force that will investigate illegal trading in GTII’s shares. The task force will be responsible for examining and assessing the possibility of illegal and deceptive trading practices by various market players, including market makers, brokers, and hedge funds. In addition, the task force will also advise the Board on potential legal actions against market participants suspected of engaging in unlawful trading activity concerning GTII’s shares. Based on its initial assessment, the task force will also advise the Board on presenting evidence of potential illegal trading activity concerning GTII’s shares to relevant government and regulatory agencies. In essence, Mr. Gilbert will lead the efforts necessary for safeguarding the interests of GTII’s shareholders.

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Creatd, Inc.(OTCQB: CRTD) announced today that it had extended the no-shop period in its Letter of Intent with Global Tech Industries Group, Inc. (GTII) for its planned acquisition. Although there’s no guarantee a deal will be reached, both firms continue to evaluate the deal through due diligence, and Creatd is exploring a collar structure to potentially value its shares at $3.00 to $5.00 per share.

It would be interesting to see if GTII news gets picked up by retail investors causing a further surge in stock prices. We will update GTII when more details emerge, so make sure you are subscribed to Microcapdaily to know what’s going on with GTII.

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Disclosure: we hold no position in GTII either long or short and we have not been compensated for this article

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Good Vibrations Shoes Inc. (OTCMKTS: GVSI): The OTC Stock To Own In 2023?

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Good Vibrations Shoes Inc. (OTCMKTS: GVSI) is perhaps the most-talked-about OTC stock to kick off 2023 as a George Sharp reverse merger penny stock.

Good Vibrations Shoes Inc. (OTCMKTS: GVSI) is perhaps the most-talked-about OTC stock to kick off 2023 as a George Sharp reverse merger penny stock. Many say they won’t sell for less than $.50 a share. They are banking on reverse merger whiz George Sharp to deliver the goods like he did when TSNP merged with HUMBL Inc. (OTCMKTS: HMBL).

As everyone knows, George Sharp is the stock whizz behind some of the biggest runners in recent penny stocks history, including the great TSNP and FORW, which also went from under a penny to $1 plus. For the past 17 years, George Sharp has been a consultant to companies in various contexts, including software development, assisting public companies with growth and regulatory compliance plans. In June 2017, Mr. Sharp was engaged as a consultant by OTC Markets Group, Inc. to develop compliance processes to bring more timely and actionable data to the OTC market. Working with OTCMarkets Group as a consultant for many years gives GS a considerable advantage, and if anyone can make things happen with GVSI, it is George Sharp. 

Reverse mergers can be more explosive than biotechs when the incoming Company has real value but is undiscovered to investors, and many RM stocks that we have covered on this website have gone from pennies to dollars. Microcap Daily was one of the first on the scene as TSNP was taking off, reporting on the stock on November 15, 2020 when TSNP was trading at $0.003, stating at the time:

“TSNP is making a spectacular run up the charts in recent weeks, quickly transforming into a volume leader and one of the top most traded stocks in small caps. TSNP started in triple zero land but has gone parabolic since then, quickly attracting legions of new shareholders who continue to bid the stock higher. Reverse Merger stocks (RM) are easily among the most exciting and explosive stocks in small caps rivaling only biotechs in their ability to make historic gains. TSNP is the perfect merger candidate; a clean shell with virtually no debt, and the new Company HUMBL is a major mobile payments player with a first-class management team with team members coming from companies like Western Union, Moneygram, Visa, American Express, Epson, Microsoft, Facebook and Qualcomm and was recently named a Forbes “Rising Startups to Watch” The merger is being shepherded by well-known OTC Markets analyst George Sharp, who brought the parties together and has provided valuable advice on strategies and compliance to complete the transaction.” We concluded, “The whole deal is being shepherded by George Sharp, a reverse merger whizz and someone known for doing it right.”

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Good Vibrations Shoes Inc. (OTCMKTS: GVSI) is a Nevada corporation, formerly known as Bitcoin Collect, Inc., Solpower Corp., Virtual Technologies, Inc., and Dynafuel Corporation, which was incorporated under the laws of the State of Utah on June 7, 1982. The Company is a perfect reverse merger candidate with a clean balance sheet of just $250k in liabilities.

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GVSI

Latest Updates

GVSI should be Pink Current any day now. The Canadians that sold after GVSI came off the Expert Market will be buying back in. Savvy investors that picked up cheapies under $.025 will be rewarded.

GVSI has also filed to cancel shares.

We also have this agreement between GS and GVSI. These are the shares that, on August 29, 2021, in recognition of the $50,000 cash invested and $50,000 in consulting fees accrued by George Sharp for professional and regulatory costs to reinstate the registrant in the State of Nevada and to have the registrant become current in its filings under the SEC’s recently imposed requirements for public companies operating under SEC Rule 15c2-11, the Board issued 300,000 shares of the authorized “blank check” preferred stock to George Sharp with 10,000 votes for each share of preferred stock to give voting control to Mr. Sharp.

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GVSI represents the highest risk-reward in the OTC Markets right now. Some investors have been impatient and sold their shares at these low levels. The key to understanding is that these things take time, TSNP took a long, long time, and GVSI will be all the more exciting. As previously stated, Mr. Sharp was engaged as a consultant by OTC Markets Group, Inc. to develop compliance processes, so if anyone can get it done, he can. Mr. Sharp continues to tweet about GVSI regularly, and it’s listed at the top of his Twitter account. All the uncertainty and bashing have created a unique situation for GVSI; it currently trades under $0.03. If things happen here as GS says they will, this will be one seriously parabolic situation with a massive upside. There are no guarantees on the OTC and no sure thing at all, GVSI is a lottery ticket for sure, but considering GS track record, I would say this is a good ticket. We will update GVSI when more details emerge, so make sure you are subscribed to Microcapdaily to know what’s going on with GVSI.

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Disclosure: we hold no position in GVSI either long or short and we have not been compensated for this article

Image by WikiImages from Pixabay

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CeCors Inc (OTCMKTS: CEOS) Opportunity Mushrooms with Disabled Veterans

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CeCors Inc (OTCMKTS: CEOS) is at heart a mushroom company with products on the shelf that is transforming into a disabled veteran benefits company.  Many have heard of magic mushrooms, psychedelic mushrooms, and psilocybin and their medicinal benefits. One of the biggest consumers of these products is disabled veterans. The core company is PsyKey which is a vertically integrated mushroom company developing medicinal products for healthcare professionals and consumers.  The products come primarily from functional mushrooms that have specific purposes.  Their mushrooms are cleverly mixed with coffee pods as a delivery system that allows people to start their day off right.      

While the company does have modest revenues from the sales of their core products, the sizzle is in the acquisition of VetComm Corp. announced in mid December. The reality was that this binding letter of intent was not taken seriously by market participants until they were beaten over the head with a video with the charismatic CEO of VetComm, Kate Monroe.    

This video outlined her goal of onboarding 1.0 million veterans of the 14 million veterans eligible for disability to get their rating.  If she accomplishes this goal she claims 

“This would put $30 billion per month into the US economy”

The huge problem they are trying to solve is the simplification of the governmental claims process.  These 14 million veterans eligible for benefits simply don’t have the energy to cut through the red tape and get a successful disability rating with the government.  VetCOMM has a seasoned team that essentially handles the rating process for the vets.  All the vets have to do is pay the monthly fee and answer the questions from VetComm.  

1.0 Million Veteran Challenge

Anyone thinking that 1.0 million isn’t attainable is underestimating both the CEO Kate Monroe, a veteran herself from the Marine Corps, and the networking power of veterans. Veterans are a tight knit community.  Think about it some of these vets were sitting in a foxhole and their life depended on their buddy doing his job.  So when these vets sign up for VetComm and get a positive result and then call their buddy up and say trust me you need to do this, there is no waffling around. Vets will listen to other vets.  This video from Randy Couture just shows you a hint of the star power they have behind this company. 

   

The government set aside tens of billions of dollars for disabled veterans but navigating the rating process with the government paper pushers is worse than combat for some of these vets.  They get discouraged and give up, that is where the tenacity of the VetComm team comes into play and knows how to successfully navigate the bureaucratic maze and get results for these veterans. VetComm just takes a flat fee for their service ($247 or $997) and the vets could receive thousands of dollars monthly depending on their level of injury.  There is no reason not to try, and the company has a money back guarantee.  Even more exciting is the back pay some of these vets could receive.  Wait until some of the testimonials go viral.  The website currently has real testimonials from veterans sharing their story of how easy it was to get rated.  The message from VetComm is that there is nothing to lose and almost everyone walks away with something.  

The CEO is a networking guru and has pictures with top politicians and generals all supporting her efforts.  These are top politicians like Senator Ted Cruz, Roger Marshall, Earnest Grassley, John Cornyn, and Deb Fischer. Then there are the celebrity endorsements from Randy Couture, Ken Shamrock, Donald Trump, Jr., Sarah Palin, Matt Thomas of Parmalee, Carl Higbee, and Gretchen Carlson. 

Revenue Estimates

The revenue off of her 1.0 million veteran goal could be $500 million considering that the average fee is about $500 dollars assuming the majority will opt for the do it yourself rating instead of the “Done-For-You” service.  The company has no formal projections but if they do release something it could be a big catalyst. The costs of goods sold on this are marketing and the customer support line.  VetComm is essentially getting a small sliver of the $30 billion monthly pot of money the government has agreed to pay out but hasn’t had to because the veterans haven’t filled out their paperwork.  Kate Monroe is creating a social movement in the veteran community to take what they are owed and not let politicians repurpose those funds for other special interests     

Acquisition Synergy         

There is a sense of community that VetComm is trying to establish.  Many of the vets that suffer from PTSD would be helped by the functional mushroom products.  There is also a planned expansion of the product line that the company alluded to last year.  A natural expansion of the line could mean that other products like gummy bears, capsules, or other delivery systems are introduced.       

Financial Analysis

The company has 332 million shares in the O/S and has 148 million in the float.  The current market cap is sitting at close to $10 million. Since they are an operational company with revenues they had their Shell Status designation removed from OTC Markets.  The company has also openly stated that they are not going to reverse split the stock or take on additional dilution.  This might be interpreted to mean that they won’t exceed the authorized limit of 500 million shares.    

This means the VetComm acquisition is likely to be paid with treasury stock.  In early 2022 87.75 million shares were brought back into treasury and could easily be reissued for the purchase.  This is complete speculation because the details of the acquisition have yet to be released but the bread crumbs lead to a very shareholder friendly transaction.  

Risks

There is a definitive deal to acquire VetComm, but investors are not privy to the terms of the deal. Therein lies the major risk. Investors have no idea how much dilution is possible in the acquisition nor do they know how strong the underlying business is. Dilution would have to be less than the authorized max.  It’s impossible to tell if it’s a good deal or a bad deal, although their comments on social media demonstrate it’s going to be very positive.  Leadership is a question too because there is no CEO at the helm.  The filings show Amar Bhatal is the president and the CEO spot is vacant. While it’s reasonable to speculate that Kate Monroe would be the ideal candidate for CEO, she has no public market experience. If the VetComm acquisition were to fall apart many investors could be holding the bag because the underlying mushroom business has not generated sufficient earnings to support the public listing short term.       

Investor Summary

The volume is just starting to ramp off of what looks like a long term bottom so there doesn’t appear to be much downside at the current stock price and plenty of upside to $.12. The mushroom industry is massive, but a unique opportunity exists in servicing veterans.  VetComm is led by a charismatic CEO who might very well take over CEOS.  Her social media standing suggests that she is going to use digital marketing and the power of veteran networking and endorsements to mobilize the veterans.  This deal can almost be considered a Software as a Service (SaaS) deal as it contains those components.  The goal of attaining 1.0 million veterans by year end could translate into massive revenues in the tens of millions or hundreds of millions with little to no customer acquisition acquisition costs (CAC).  It’s too early to tell, but CEOS is one of those long term fundamental plays that should be held in a speculative portfolio. Should they complete the acquisition and give revenue estimates investors could see long term 12 – 18 month upside up to $1.00 assuming a fully diluted 500 million O/S and $500 million in revenues trading at a multiple of 1X sales. The downside risk is nominal given their rapidly expanding mushroom line that could be cash flow positive on its own this year.  

Disclosure: MicroCapDaily has not been compensated for this article. This post was written by a guest contributor and posted on our website for free. The owners of MicroCapDaily have no position in any of the securities mentioned.

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