How I plan on trading the E Share distribution. On October 1, 2016 38 million E shares are eligible to be converted to 380,000,000 common shares. I do not believe that all 38 million will be converted, but however many are converted, will dilute the share price for a while. I believe the diluted share price at that time will be a major, short-lived buying opportunity and not affect the SP long term.
I am assuming that about 2/3 of the E Shares will convert, or about 25 million. At that time, the Outstanding Shares (OS) will increase from the current 85 million to about 400 million. The Share Price (SP) for common shares will probably decline to one half of its current price at that time, which I am anticipating to be no lower than $1 per share. Assuming the SP declines to around $.50 or lower, I will be a buyer.
I have decided at this time not to convert my E shares on October 1, 2016 and to wait until the SP stabilizes at $1-$3 or higher, then convert 1,000 to 5,000 at a time over several weeks. I believe this strategy will maximize my value of the E shares at the highest price possible at the time.
Let's look at what the situation will probably be after the October, 2016 dilution: NHMD sales will be in the $millions, profits will be climbing, Share Price will be fairly stable and growing; NHMD will be preparing to be listed on Bulletin Board and looking forward to 2018 become up-listed to NASDAQ (must have 3 years of profits - which will be 2016, 2017 and 2018); and there will be rumors around of a buy-out by a major food company.
What will be the Share Price? It will be around 20 X the per share earnings. If NHMD sales are $50 million earnings could well be 7% or $3.5 million. If there are 400,000,000 shares issued, the Earnings/Share could be in the area of $.009. That would make the Share Price about $.175 based on earnings. But, NHMD's share price will be hased on future growth for the next several years. Cut the Sales in half, and the profits in half and we're still looking at a remarkable buying opportunity today and upon any significant dip in SP. Anyone holding 500,000 shares today and 50,000 E shares, if all converted, will have 1 million shares, and using my plan could easily be millionaires. Those holding larger numbers can be multi-millionaires. The reasons are...
I believe NHMD will have several major financially positive occasions over the next three years: These are:
By January 1, 2016: SP will be at a $1 or higher as sales balloon to big box stores, and the company ends this year with a relatively small profit, or loss.
By October 31, 2016: NHMD will have recovered from the October, 2016 50% decline in SP caused by the coming E-share conversions and be boosted by the buying opportunities the week before and after October 1, 2016.
Each Quarter Report in 2016-2018: These will show sales increases and profit growth and be a regular boost to SP, typically followed by a decline of 1/2 of the growth (if at $2 and it bumps to $3, it will normally fall back off to $2.50 before continuing on its upward path).
During 2016 to 2018 NHMD will be introducing many new products, some using the piston/spray-can technology, others not. There will be sales into international markets which will be both product sales and licensing income. Sales will also increase in private label areas. Both of these could be very substantial during the 2016-2018 time period.
I do not believe that institutions will be buying NHMD at this time. The day an institution buys NHMD will be a tip-off that a major food producer is about to make an offer for the Company, or is about to begin purchasing shares to take over ownership. Or, NHMD is about to make an offer on another food company. Shareholders will be faced with a major dilemma as to when they should sell their shares or if they should hold them.
I do not see any need for NHMD to execute a reverse split. In the very near future the share price will exceed $1 and in 2016 pass the $3-$5 mark as revenues and profits climb steadily. The $3 and $5 level is critical to attracting institutions and major investors, as well as up-listing to major market boards.
Sometime in 2017 NHMD will seek to be up-listed to Bulletin Board and be accepted. When announced, SP will climb by at least $1, probably to around $3-$5. I believe $5 is the maximum level of SP for NHMD, absent the addition of a number of new products being manufactured at another factory to be built. There is a limit to the sales and, therefore the profit possible is also limited. About $.15 to $.20 per share is where I believe the maximum profit level will rest.
But, I believe that NHMD will add additional production lines to keep up with an increasing demand in the 2016-2018 time period. At some point, however, the maximum demand will be reached - where that is in terms of number of cans, is anyone's guess. Long term (four-six years out) growth will rest on the development of new products; acquisition of existing products of others; and/or selling into a number of international markets, or licensing agreements.
If NHMD should be bought by a major food producer, I believe the selling price will be in the area of $5 per share and the time frame will be within the next four years.. Nate's will be worth more in profit to an existing company than it is to NHMD shareholders (because there will be a substantial 20% to 30% savings in G&A expenses and marketing costs to the right buyer).
I do not consider Nate's pancakes and waffle mix to be products mainly for middle-income and upper-income markets. The advent of food stamps and their common "miss-use" by those in lower-income situations makes Nate's products just as meaningful in those markets. I also do not consider Nate's products to be a fad or "gadget" whose interest and use will decline. Within a year or so, Nate's products will be generally accepted as "the way things are" when making pancakes or waffles, and even other foods, similar to Miracle Whip and other brands of whipped cream, refrigerated biscuit dough, many types of frozen foods, vegetables and fruit and even shaving cream.
This investor's plan as outlined here will surely change over the coming three years as NHMD changes occur, and there are changes in the food industry, national and international economy, value of the dollar and the political situation in the U.S. I would be quite interested in other's plans and how you see the future of NHMD.
