Briskie Business

LINK:
https://entvusa.com/briskie-business/

Nice to see Briskie has extra time on his hands to launch the world premier of Briskie Business, even though he's the CFO of a publicly traded company that still hasn't file a 2019 10k. Good to see the man knows his priorities!

SECURITIES AND EXCHANGE COMMISSION vs. MassRoots

LINK:
https://www.newcannabisventures.com/wp-content/uploads/2020/04/Leighton-SEC.pdf

page 17
Thus, Sullivan’s end-of-day purchase ensured that his sales earlier in the day did not depress the public-market price of MassRoots stock. These purchases and sales had the manipulative effect of artificially supporting the public-market price of MassRoots stock.

On Tuesday,April 21st, at 2:57 pm eastern, YGYI traded to $1.45. Beginning at 2:58 pm, the stock traded up, reaching a price of $1.6999 by by 3:10 pm.

I've made sure the SEC is on to you. You are going to end up in the same place as Mr. Leighton and the group at MassRoot.

Xerox becomes latest maker of hand sanitizer

Xerox Holdings Corp. has become the latest maker of hand sanitizer. The copier maker today said it was working to produce about 140,000 gallons of hand sanitizer by June as surging cases of the new coronavirus have threatened to test medical-supply capacity across the U.S.

Xerox said it would produce the sanitizer at its facilities in Toronto and near Rochester, N.Y., and expects to deliver its first batch by the end of the month. The company said it would distribute the product to resellers that are approved vendors to front-line health-care organizations.

We are experiencing the challenges facing the cruise line industry ...

Dave Briskie, President and CFO of YGYI, the parent company that owns CLR Roasters, stated, "We are experiencing the challenges facing the cruise line industry as well as weakness in our on premise business, however, the strength of our retail business is helping to offset these challenges inside our coffee business."

If Yougevity is ever able to get itself together to report full year 2019 results, this remark by the CFO seems to be preparing the market for a terrible fourth quarter in coffee ... Some things never change.

QUESTIONS TO PONDER
How is this company able to adjust operations to sell hand sanitizer, yet be unable to file its 10K on time, especially considering that accountants work from home and production workers go to a physical workplace?

If Youngevity files a 10K every year, and every year the SEC gives it and every other publicly listed company 90 days from the end of its fiscal year to make the filing, why did the company announce it couldn't meet the deadline, even before the effects of coronavirus impacted operations?

Isn't this the second consecutive year the company failed to make a year end filing within the period allowed by the SEC? Spoiler alert: next year, the SEC expects a filing within 90 days of the end of the year!

What effect will hand sanitizer have on the company's hemp business?

Huge Wave of New Manufacturers for Hand Sanitizer

I suppose YGYI's idea was so great to jump into the hand sanitizer business, an avalanche of others has decided to join the party!

Neptune Successfully Completes Submission to U.S. FDA for Registration of its Conover, NC Facility for Production of Hand Sanitizers
LINK: https://neptunecorp.com/sites/default/files/2020-04/NEPT-Registration%20of%20Conover%20Facility-Hand%20Sanitizer%20Prod%20(2020.04.09)_EN.pdf


Complete List of Distilleries (Including Anheuser-Busch) Making Hand Sanitizers Instead of Spirits
LINK: https://parade.com/1011922/jerylbrunner/distilleries-making-hand-sanitizer/

Gervasi hand sanitizer production in full swing
LINK: https://www.cantonrep.com/news/20200409/gervasi-hand-sanitizer-production-in-full-swing-available-for-sale-to-public

Blake's Hard Cider joins the helpful industry producing hand sanitizers
LINK: https://www.macombdaily.com/news/coronavirus/blakes-hard-cider-joins-the-helpful-industry-producing-hand-sanitizers/article_dbba6c9e-7a66-11ea-b5f2-0b646cefd0f3.html

Distilleries and Breweries Pivot to Producing Hand Sanitizer
LINK: https://www.bloomberg.com/news/articles/2020-03-24/companies-revamp-to-make-hand-sanitizer-and-coronavirus-products

$1.92 (Friday's closing price) minus $0.70 (pre-hand sanitizer price) * 30 million outstanding shares = $36.6 million of value created from hand sanitizer announcement.

Hand sanitizer = alcohol + aloe vera, very easy to make but currently in short supply. Once Purell and others in this business ramp up production, hard to see who buys from YGYI. At most, YGYI remains in this business for a year, probably less. This is a super low margin business. Even if it carries 15% EBITDA margins (real margin is lower), that implies $244 million ($36.6 million / 15%) in sales of hand sanitizer this year by YGYI. That's a lot of hand sanitizer! The company did less than $185 million in revenue last year. Not a stretch to say people are very bullish on this hand sanitizer announcement.

I doubt the company has capacity to sell $50 million of hand sanitizer to say nothing of the $244 million baked into the current price movement.

The hand sanitizer announcement was worth at best $0.25 per share, or a stock price of almost $1 per share ($0.70 + $0.25 = $0.95). This company, however, traded up to $2.70 per share on the announcement. How does a company with average daily trading volume of 90,000 shares trade 32 million shares in a single day? Short squeeze? Sure, that's part of it, but something else is going on here.

Any sensible investor will take their winnings off the table before this comes crashing down to $1 over the next few days.

Given how this stock has traded up in the last hour of trading over the past few days, I wouldn't be surprised if an SEC investigation is already underway. The SEC has been less indulgent of shady trading activity in these small cap cannabis/CBD companies. Last week, the SEC fired a shot across the bow of the cannabis/CBD industry with this this suit:

SEC Sues Cannabis Investor Doug Leighton for Allegedly Manipulating MassRoots Stock Price

LINK
https://flipboard.com/topic/cannabisindustry/sec-sues-cannabis-investor-doug-leighton-for-allegedly/a-uek2G_QjSyObz6QcJJEw7Q%3Aa%3A89958095-62d24b255e%2Fnewcannabisventures.com

Equity tanked today to 7 cents on huge volume of 507k shares. It appears the investors who set the bid at 8 cents finally realized the equity is worth less than 5 cents. Better late than never!

DIMEQ research

For a great write-up on DIMEQ, see the following:

http://thediligentinvestor.blogspot.com/

MOR - September - Ugly Picture

This company continues to destroy value for equity. According to September's MOR, the company burned $1.3 mm in cash during the month versus a forecast of $760k. That's $540k more than anticipated, or a 71% negative variance. MBRK lacks leadership capable of winding up this mess without squandering the company's extremely limited cash resources. Even with a Management Incentive Plan providing a $750k bonus if equity gets $7.5 mm in distributions, the company is unable to execute on the simplest of tasks, which is to minimize spending cash at a company with $0 revenues and a single digit employee count!

The current share price of $0.08 implies an equity distribution of approx. $7 mm. Good luck buying there when the Par claim won't be settled by arbitration until February 2011 at the earliest. At the current rate of monthly cash burn of $1.3 from October until February, or 5 months, the estate would be left with $6.5 mm before paying post-petition and pre-petition obligations. At the end of September, those liabilities stood at $1.2 mm and $5.8 mm, respectively, not including Par's $3.5 mm claim. Even without a payout to Par, payments to claimholders would total $7.0 mm ($1.2 mm + $5.8mm), leaving equity with $0.

This is not a pretty picture for equity.

Over the weekend, I spent time trying to figure out whether I should keep my investment in Middlebrook or not. I’ve never invested in a liquidation before, so much of this is new to me. Here’s how I understand the situation as reflected by the most recent filings:

cash $18.3 mm

post petition
post petition payables 0.440 mm
other post petition liabilities 1.344

pre petition claims
unsecured priority claims 3.001 mm
unsecured non-priority claims 2.200
Par claim (max.) 3.500
Gleacher payment 0.600
Est. of operating expenses (Sept to Feb) 1.000
Seneca Parkway claim 0.400
Remaining cash for equity 5.819 mm

MIP payment 0.000
# of shares 86 mm
Value per share $0.68

If Par claim is disallowed, add $3.500 mm
Cash, net disallowed Par claim 9.319
MIP 0.750
Remaining cash for equity 8.569
Value per share $0.990

Share price on October 9th $0.880

If this is correct, the upside is 13.2%
and downside is 34.1%

I am interested to hear what other investors who know this name better than I think. If, however, this analysis is correct, I'm not sure I want to let my investment ride on an arbitration ruling in January 2011.

Crazy trading going on in Middlebrook. Today, volume reached over 600k shares on a stock that had been trading in the 20k to 30k volume range just a week earlier. I think the smart money realizes there's no upside as they've headed for the exits over the past few trading sessions.

See below. Am I missing anything here that suggests I should continue to hold?

I reviewed the latest Monthly Operating Report available, which is the August report. The report lists cash of $18.3 mm, post-petition liabilities of $1.8 mm, and pre-petition liabilities of $8.3 mm, not including the Par liability. Since August, the estate incurred expenses for September. Let’s assume those expenses consist only of payroll, rent and professional fees. So, let’s modestly assume these expenses are $173k, $33k, and $200k, respectively, for September. If you check the historical monthlies, payroll and professional fees have never been lower in previous months than what I’m assuming for September. Putting all this together, I get $18.3 mm - $1.8 mm $8.3 mm - $406k = $7.9 mm. Let’s assume $0 for Par’s claim. Based on this recovery to equity, the MIP will pay management $750k, leaving $7.1 mm for equity, which implies $8.3 cents. The best case scenario recovery is below $8.3 cents given that the estate will continue to incur expenses at least through January 2011, the date when the arbitrators will rule on the Par claim. If Par wins its claim, the recovery is reduced by another $3.5 mm, leaving $4.4 mm for equity, or 5.1 cents. The equity price closed today at 8 cents on 154k volume.

From these levels, it seems there's no upside and significant downside to Middlebrook equity.

First time poster!

I'm beginning to sour on Middlebrook's prospects for returning cash to equity investors as recent developments continue to disappoint. While Friday's deal capped Par's claim at $3.5 mm, an arbitration decision on the final claims resolution won't come until after February 2011, causing the estate to burn through a lot more cash than I originally anticipated. Also, I had hoped the judge would have disallow the Par claim entirely on Friday, another negative for this case.

For the past three months, payroll totalled $215k, $174k, and $388k. I'm shocked that payroll expense more than doubled from July to August. The direction of these expenses makes me wonder what's going on. The last time I checked, I thought this was a liquidation, not a company preparing for a new product launch.

The final development that's spooking me relates to trading volume. Volume on Friday exceeded 600,000 share versus average daily volume in the 20k to 30k range. These volume numbers concern me that "smart money" is bailing out of Middlebrook.

If anyone knows of something positive going on, please let me know. Otherwise, I'm tempted to bail on this company as well.