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Would love to see the details of this deal:
https://www.greenmarketreport.com/sunset-island-buys-calamus-for-undisclosed-amount/
Calamus Officers:
Lori Livacich
Anastasia Shishova
It is all well and good that SIGO is going to get audited financials; however, VBF Brands is where the active and on-going clone business resides. It is my understanding that the VBF subsidiary was sold a while back at no benefit to SIGO shareholders.
I would agree with that. As non-profit collective, they can show profit, so any revenues would need to be re-invested back into the operations.
Not sure what grandfathering has do to with anything. Regardless, the proper building permits were filed with Monterey County in March 2017 and they were growing as a non-profit collective prior to August 2017. No need to be grandfathered anymore, as they are license by the State of California.
It is better than that. Once you are done trimming the buds for medical and adult-use, you are left with a bunch of trimmings and stems. You press/extract the oil out of that and make vape cartridges. No waste, very little extra expense, more revenue.
Revenue-wise, I am right there with you at around $20-22 million. I know nothing about margins in this space, so I am missing that piece. In terms of P/E, I point to the below article about Canadian cannabis companies. The article recommends one company because it has a "reasonable" P/E of 41, so you can see that we could certainly be above 20 here (it talks about another company with a P/E of 210!!!), especially with the low float with will make shares trade rich based on technicals.
https://www.fool.ca/2017/08/18/finally-a-marijuana-stock-without-an-astronomically-high-pe-ratio/
That is very helpful and now I do remember those comments. I believe 200/sqft was when they were planting 480 plants per bay and now they are up to 1,000 per bay with the next retrofit pushing it to 1,600 per bay.
Thanks again.
Personally, I think $30 million is a high number (pun intended) for the current size of the space, but not unreasonable with already planned expansion. Additionally, your 40% margin rate is conservative and 20 P/E is VERY conservative. I may not be able to tweak things enough to get my valuation to $40+ but I can certainly get mine far north of $10.
Put technicals on top of that and I don't see myself selling any time soon. Actually wish I owned more and will buy any pullbacks.
I very much agree with you on the value of the licenses themselves. Additionally, the speed with which they were obtained (roughly one month) shows that expansion and additional licenses should not be an issue. The company is just getting started and will grow over time, so the P/E can be much higher than 20-30 right now,as someone mentioned about start-ups. Many people have different fundamental fair values, because they are all based on different assumptions. The one common aspect is that they are all a lot higher than $2.75 right now.
Fair enough. It can be more art than science, in that people can value things in different ways. Neither is right nor wrong and that is why there is a market. If there was only one right answer, then a stock would just sit there and not move.
However way you look at it, the stock is still massively under-priced, the float is very low (and will be that way for the next few years) and a ton of shares are in strong hands. The low float and technicals will allow the P/E to go much lower than 20-30. There has been a lot of buying by strong hands. There simply are not that many tradable share left out there.
Not sure how to calculate the correct revenues, because I don't how much a plant can yield, but personally, when I am valuing the stock, I count in the 46,000,000 shares that are locked up (for 3 years upon conversion to common) in the Preferred Shares because the owners will get paid as well if the company is ever bought. That said, a 30 P/E is still probably conservative. If $30 million is correct, then I value the stock at around $7.00. Keep in mind that is today with no inclusion of any other business lines (clones, vape cartridges, etc.).
I don't know. I can only go by the 8K from Jan. 22, 2018. The space that you mentioned has not been built out yet and when it is, they will apply for more licenses. There is no limit to number of licenses that you can have, but you pay taxes of $15 per sq ft for the maximum footage of the license. They have 20,000 sq ft built out and at any given time, only 15,000 sq ft will be planted. If they go over by 1 sq ft, then they would need to move to a larger license or get another one and pay taxes on space that they haven't even built out yet. Why pay an extra $200,000-300,000 on space that is not built yet. As we have seen, the license come through rather quickly. It took less than a month. Let them get the initial space fully operational, get good revenue coming in and then they can expand. Why borrow money now when you can finance expansion through revenue?
Could be wrong on the number of bays, but this is the explanation about square footage from one of the 8K's on the top of the board...
Q2. What is the total square footage the Company can plant now under the licenses?
Q2. The Company can plant up to a total of 15,000 square feet. The current greenhouse is 20,000 square feet. The county charges its tax of $15 per square foot (annual) based on total canopy size of the license. The Company is planting its grow bays under a staggered system. This means the grow bays are harvested one after the other. So after a bay gets harvested it is cleaned and prepared for next plating, which takes about 7-14 days. The harvest team would be harvesting the next bay as the previous bay is cleaned. Once the 2 nd bay is harvested it can be cleaned and prepared for harvest while the 1 st bay is being planted and the 3 rd bay is being harvested. This creates a rolling effect in the bays where we are in a constant plant and harvest cycle. As such, the company determined at any one moment in time the 20,000 square foot greenhouse would have approximately 15,000 square feet of canopy space based on the staggered harvest system. Based on this determination, the Company didn’t see the need to pay tax on the extra 5,000 square feet that would be in constant state of cleaning and prep.
Once the Company has completed its retro fit, we would expect to file for 3-4 5,000-10,000 square foot licenses for a total of 15,000-40,000 of grow space to accommodate the possible racking system.
You cannot apply for a specific number of sq ft. The license is a range of space.
Specialty = Up to 5,000 sq ft
Small = 5,001 to 10,000 sq ft
Medium = 10,001 to 22,000 sq ft
They have one Specialty and one Small. One is Medical and one is Adult-Use, but I can't remember which is which. Each step that you up along the size spectrum makes it more difficult and costly to obtain a license.
Fact is that this is all that they need. They are growing 6 bays that are 2,000 sq ft each (12,000 sq ft). The planting is staggered and with 4 harvests per year, they are harvest one bay every 2 weeks.
Considering that I misinterpreted things recently, I just want to make sure that I fully understand what you are saying here.
Essentially, the explanation for everything is that the company is lying?
I think that you are correct regarding the license names. It will most likely look something like Grupo Flor. They have cultivation licenses under FlorX and a distribution license under East of Eden.
There is some interesting information in the press release. It says that they are planting 2,000 sq ft bays and that each bay currently handles 1,000 plants per harvest (says they are looking to improve that to 1,600 plants). If they have 12,000 sq ft of grow space, then they could have 6 bays. If you make some assumptions about the yield per plant, number of harvests per year and the wholesale price of cannabis, then you can come up with some form of estimation for potential current revenues. I don't know enough about the industry to take a stab at those assumptions.
Personally, I would prefer that they expand a slow pace, such as over the next year after they have obtained a permanent license. It is better to expand slowly using revenue/profits than expanding from the outset, where they would need to tap to capital markets to raise funds. Slow expansion keeps debt off the balance sheet and keeps the share structure attractive.
Apologies. I believe that I misinterpreted what you were saying. Yes, I agree that 46,000,000 common shares didn't magically disappear. In essence, they are sitting as preferred shares that can't be sold for 3 years after conversion. That is fine with me. I don't think that I have held a stock for 3 years In my life outside of my primary portfolio of blue chip names.
That is also why I questioned the market cap and pps calculations that people were using a few days ago. In my mind, a $100 million market cap = $2 per share. That is fine with me as well. A solid business model In A hot industry with a super low float will cause this name to run hard, especially if they show legit revenue.
The two principals own a combined 46 million shares and were converted into 4.6 million Series A Preferred shares, which left the O/S around 5 million. The preferred can be converted back to common at a ratio of 1 to 10, but any converted shares are locked up for 36 months. The exact language is in the amendment to their Articles of Incorporation on the State of Colorado website. It was filed in December but if you want to look it up.
There is another 8K somewhere explaining how they will sell some shares to fund expansion.
In the last 8k posted above...
Q3. Previously the Company mentioned that it would operate a joint licensed manufacturing facility for 3rd parties to produce products such as oils and edibles. Is that continuing or will it?
A3. No its not occurring and has not. Previously, the idea was to build a facility that the 3rd parties could use to manufacture cannabis related products. However, the license that would be required to operate that business has not been established by the State of California under MAUCRSA. After meeting with the heads of the three state cannabis licensing authorities, the Company was informed that the license for that type of business wouldn’t be established until sometime in 2018. So in March 2017, the Company executed the lease for the current greenhouse and began operating the cultivation business. The Company will look at the joint space concept once that license is established.
Old information from November 2016. Latest description from the September 2017 10-Q filing...
NOTE 1 – DESCRIPTION OF BUSINESS
Our Company
Sunset Island Group, Inc. is a Colorado corporation. The Company’s principal line of business is the cultivation of medical cannabis. The Company has leased green house space in Northern California that has been approved for cannabis cultivation. The greenhouse is 12,000 square feet; however, the Company is currently operating on approximately 22,000 square feet. This includes the 12,000 square feet of greenhouse space which 10,000 square feet is used for cultivation and 2,000 us used as staging area for planting and harvesting. The Company is currently looking to expand to approximately 154,000 and has been in discussions with or current landlord about expanding to 154,000. Our landlord has over 750,000 square feet of space becoming available shortly. However, the company has recently begun to look at other locations that are nearby the current operations. The Company has agreed to acquire 6,000 square feet of a neighbor’s greenhouse and expects that the agreement to be in place October 1, 2017. The Company is currently in discussions to acquire the neighbors entire 34,000 and is looking an additional 100,000 square feet that is close to the current operations.
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=12286231
The two groups need to work in parallel. The state says that you local approvals and the county says that you need state approvals. One of the 8K's mentions that the state had been in contact with the county.
From what I have read, they do not have any issues continuing to grow at the current time. Their growing was lawful under Prop 215 and SB 420 and I have read that firms can continue to grow under the old regime as long as their state licenses are pending. I have seen the building permits on the Monterey County website from March 2017 for a cannabis cultivation facility at their property, so the county is fully aware of what they are doing. The state already approved one license, so they are aware as well and did not have an issue with giving them a license.
My point is that everything appears to be in good shape but it will take a little longer to get through government bureaucracy.
I think Monterey County is the bottleneck...
http://www.montereyherald.com/article/NF/20180108/NEWS/180109869
Yes, but there are another 46m common shares of the owners (TJ and Val) in the Preferred A shares? Those are not going to disappear in a buyout.
Can you explain your math? With 50m shares out there (including the 46m that are locked up in preferreds), wouldn't a $50m-$100m buyout mean $1-$2 per share?
This is just my understanding and I am not a lawyer, so take it with a grain of salt.
Under previous state laws (Prop 215 and SB 420), certain forms of not-for-profit entities could lawfully grow medical marijuana. From what I have read, the exact definition of those entities was never really clear and there were many loopholes that allowed hundreds of cultivators to operate.
Historically, VBF Brands was set-up as a not-for-profit. Currently, those entities are permitted to continue to grow as long as their new state license application is pending.
Again, just my own layman's interpretation.
Wow, that's great. Who did you forward your in-depth info to? Can you copy me next time? I can read it while I am fishing.
It is in the Alan Brochstein article that you are so fond of circulating. Did you actually read it or just skim the headline?
VI. CONVERISON RIGHTS
Each holder of shares of Series A Preferred Stock may, at any time and from time to time, convert (an “Optional Conversion”) each
of its shares of Series A Preferred Stock into fully paid and nonassessable shares of Common Stock at a rate equal to 1 Series A share
for 10 shares of the Common Stock. However, any common stock received as part of the conversion shall be restricted for 36 months
from the date of conversion,
https://www.sos.state.co.us/biz/ViewImage.do?fileId=20171622559&masterFileId=20051365777
It is all explained at the website below. There are links to all of the different license lookup sites. Also, at the bottom of the website, there are presentations that give overview of the different agencies and what the different licenses are for:
Activities:
Distributor
•Transporting cannabis goods
•Arranging for laboratory testing
•Conducting quality assurance review of
cannabis goods to ensure they comply with all
packaging and labeling requirements
•Storage of cannabis goods
https://cannabis.ca.gov/licensing/
In my opinion, we are waiting. The new information in today's 8K is that they have "applied" for distributors license. It says that they have received their "manufacturing" license, but we already knew that from the 8K on Jan. 3rd.
To recap, the company has applied for 3 types of licenses - cultivation, manufacture and distributor. Manufacture was approved on Jan. 2nd and we are waiting on approval for cultivation and distributor.
You are starting to make things up and cannot keep your message boards straight...
DO SOME REAL DD ON A PROVEN WIFE BEATER WITH MANY OTHER CHARGES!
https://www.juralindex.com/saeed-sam-talari.html
Many thanks!!!
I have no idea who Joseph Wade is, as I have never heard of him. The fact is that one person on this board who is referenced in the article that you posted and who seems to have some history with Joseph Wade keeps insisting that Wade is still involved in SIGO. He WAS involved but stated in his filings that he has exited the marijuana business and no longer has any ties to SIGO that I have found.
The company has been extremely transparent, people have visited their greenhouse, they already have one license from the State of California, the county of Monterrey has signed off on a second license (awaits state approval) and they appear to be doing everything by the book.
In my opinion, SIGO is legit, but you should most certainly do your own research.
You are using a third-party search site that appears to be out of date. Below is the link to the official State of California search site and if you search for VBF Brands, then you will see that as of August 2017, the guy you are talking about is no longer involved in VBF Brands. Only TJ and Val are listed as officers.
https://businesssearch.sos.ca.gov/
OK. Thanks for educating me. I didn't realize that a company needed to file every time that they purchased a piece of machinery that can be bought on Amazon.
That's it for me. You look into things and you believe in a company or you don't. No need to debate.
GLTA.
Haven't searched all of the 8K's, but it was mentioned in a 10Q...
"In November 2016, the Company planned to acquire a C02 extraction machine to begin producing oils for the Company’s clients. However, the Company expects the acquisition of the CO2 extraction machine to be completed in January 2017."
https://seekingalpha.com/filing/3467341
Well, that is certainly good news for a company like SIGO, who needs to buy wholesale marijuana to convert to oil extract for making edibles and vape cartridges until they get their license to grow their own. This is certainly a positive development. Thanks for posting.
Yup. We can only guess how SIGO came to acquire VBF. My guess is that VBF is owned by Battle Mountain Genetics, which is a wholly owned subsidiary of SIGO, does show up in filings and the reverse merger was done in the same month of October 2016 and involved Novus. Somehow, SIGO acquired VBF during that process and it sits under Battle Mountain.
My point was that I believe that TJ and Val are legitimately building the SIGO business with good products and a good business plan, but they needed to get away from 1PM. What is going on at 1PM is a mess, but it doesn't appear to involve SIGO anymore and the future looks bright for SIGO.
These are all legitimate questions and I frankly don't have the time to connect all of the dots, but they are out there.
Thanks to Surfkast for sending an article that discusses some background. Congrats to Surfkast for being quoted in the article as the source of the information. It is always helpful to back up one's opinion by essentially quoting yourself. The article certainly shows that someone should be investigating 1PM Industries, but the connections to SIGO are dubious with many assumptions. Here is how I see things...
TJ and Val built VBF, which was operating under the 1PM umbrella. They earned some awards for both products and marketing design. The company seemed to be heading in the right direction. While 1PM closed their marijuana division in February 2017, it states in one of their filings that the decision to leave the edible marijuana business was made in October 2016. That is the same month that Novus Group received 4 million shares of SIGO. I am not sure how Novus came to possess VBF and how 1PM later came to possess Novus and the SIGO shares, but it appears that TJ and Val moved to SIGO, acquired VBF from Novus for the price of 4 million shares of SIGO and separated themselves from 1PM completely.
Again, not sure how all of the pieces fit together, but it appears to me that TJ and Val moved on from 1PM to set up their own business under a different, unrelated entity - SIGO.