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I've been holding this since August/September of 2019, bought after they had their first profitable quarter. Picked up about 54K shares at .10
Diamond hands, held through all the last year - unfortunately I didn't have any free cash where I could have doubled down at those previous low levels.
I think Surna is uniquely positioned to make attractive strides in their business model in the next 2-4 years, especially under the current administration here in the US. Sure, there are multiple HVAC companies out there that can service grow operations - however Surna has taken the time to build out their portfolio of proprietary software and equipment that I think *should* give them a favorable position over the average Joe.
They've had two great contract announcements in the last 6 months and that's with COVID. Their management and sales team, I think, knows what it takes to get the job done. Given that COVID should be winding down in the next 6-12 months and when you couple that with the strides the cannabis industry should be making at the federal level over the next 12-24 months, I really think Surna is going to have multiple avenues to sustained growth.
I think you already saw it
Fairly certain that CURLF does not trade in the premarket nor is it traded in the after hours market.
There are always bozos out there that think Rome was built in a day.
I bought in the low $3's. I watched it go down even further. I watched it go up to the mid/high 4s then pull back. To the 5s then pull back. This is what happens in the market, people capture gains and it sells off a bit.
The Q1 report was fantastic. Nearly every professional analyst has this rated a buy. Wait for the Grassroots acquisition to be officially completed too.
No reason to walk away or bad mouth the largest US based publicly traded vertical dispensary in the country because it had a few bad trading days after its quarterly.
"OTCQX Manipulation" - give me a break.
You are severely under educated.
Actually - this follows a pattern we've seen with the last year or so of quarterlies. Typically there is a huge run up the day of the announcement, followed by a sell off.
I have access to the Bloomberg system from my work at an asset manager. Of 14 professional analysts writing a recommendation on Curaleaf, there are 12 buys and 2 holds. The average 12 month trailing price target is about $10.12~.
The financials yesterday were great. Little healthy pullback. Love the long term prospects here and I'm ecstatic I was able to buy at $3.35.
OTCX Manipulation? What?
You understand that Curaleaf IPO'd and listed their shares on the CSE (Canadian Stock Exchange) specifically because it allows them to issue stock without having any assets in the US where it would become a legal problem due to Federal Law? Then by listing on the CES, they are allowed to be a member of the OTCX and get their shares available for the US addressable investment market.
Curaleaf would, with 99.9% certainty, have listed their shares for IPO in the US from the start - if this country wasn't completely ass backwards in the way that it has scheduled marijuana (still schedule 1, which from the feds eyes makes it just as dangerous as heroine), which in turn allows the FDA to keep their heads up their asses in regards to making a REAL judgement on edibles and other derivatives.
There's no "manipulation" going on here. The reality is that this company is operating in an extremely profitable area, however, they (along with all the other private and public retail marijuana / CBD companies) are caught in this tremendous legal grey area between individual states and the federal government. That's going to drain on upward price trajectory.
This is also not a pump and dump. Have you taken a look at actively published analyst recommendations? There are 14 Investment Banks currently writing a recommendation on Curaleaf - there are 12 buys and 2 holds. The average 12 month target price for those 12 buys is $11.77, over 100% from today's levels.
Notably, Viven Azer from Cowen Investments (who led the charge in valuing the public marijuana companies) has Curaleaf with a target of $9.50. She is a watch dog within the investment community, recently downgrading both Tilray and Aurora.
In the entire marijuana sector, the slowdown and sell offs you are seeing are a bi-product of the hype and excitement winding down, which is ultimately a result of the regulatory headwinds in the industry.
Curaleaf is going to remain a major player - but this country has a lot it needs to figure out still with regulation. Currently, Curaleaf is forced to be silo'd on a state-by-state basis. That means NO moving flower between state lines (federal crime), that means NO moving money between state lines (federal crime), that means managing payroll in silos (expensive), and lastly it means operating almost exclusively on a cash basis BECAUSE our lovely politicians can't get the SAFE banking act passed - WHICH HAS BEEN SITTING IN THE SENATE FOR 5 MONTHS - which would allow companies like Curaleaf to get traditional financing loans and bank accounts set up!
Alright, rant over.
Speculation.
I agree on your price range.
That said, I think it'll take until the Annual 2019 and/or Q1 2020 reports are released to see this move further. Back to back quarters of positive net income in Q2 and Q3 2019 were excellent steps in the right direction, but keep in mind, SRNA was still carrying a net loss for the year.
If the Annual 2019 report has another strong showing for Q4 2019, with a third straight quarter of positive net income & growth, I think that's when we have the inflection point.
Also, it would seem that 2020 is off on the right start given the news from 2/11. Oddly enough, you know what I like most about that? ZERO talk of revenue. It' strangely refreshing to me to see a firm on the OTC finally have a note of substance with a growth story, without having to try and pump the sales figures that came with it for a short term upward price bump. What also specifically caught my eye with that announcement is scope - servicing clients in Canada, California (west coast), with Oklahoma and Michigan in the middle of the country. Shows that their sales people are engaged with the proper national/international audiences.
If SRNA continues to execute at the pace they have been over the last 6-9 months, the stronger my opinion of them grows as one of the best buy and holds I've seen in a while.
This is a really good point and shouldn't be overlooked. I have a family member in the retail cannabis business, his store is corporate owned by one of the largest cannabis retailers in the United States.
Their biggest problems? Payroll & banking. They make money hand over fist, but they cant use traditional banking methods for processing, due to the legality of retail marijuana at the federal level still remaining a grey area. Additionally, they were using ADP (the largest payroll service company in the US) as a payroll provider, but they were fired from ADP, because ADP didn't want the risk of the federal government coming down on them. That has forced them to do all payroll in-house, which is VERY expensive for a company of their size.
While SRNA can leverage traditional means of banking and financing, many if not all of their customers cannot - and this means the entire industry lags because there is a lack of access to appropriate capital.
SRNA is servicing the right industry, there's no question about that. They are also making the right move in going after MFO's (multi facility operators) because their scale allows SRNA to more safely assume a transfer of revenue for goods & services rendered.
VATE currently follows the Alternative Reporting Standard (which can be found on their company profile page on OTCMarkets.com).
Under that standard here is the guideline:
Information contained in annual financial statements will not be considered current more than 90 days
after the end of the issuer’s fiscal year immediately following the fiscal year for which such statements
are provided, or with respect to quarterly financial statements, more than 45 days after the end of the
quarter immediately following the quarter for which such statements are provided.
For the Annual Statement, what that means in normal speak is that they have 90 days from year end to file - so the 2019 Annual needs to be filed by 3/31/20.
For Quarterly Statements, they have 45 days from the end of the quarter to file. So when Q1 ends on 3/31/20, VATE will have until about May 15th 2020 to file.
VATE will not file a Q4 2019 statement, as that is included in the Annual.
This is what makes the news from yesterday important. VATE follows the Alternative Reporting Standard, which means that they are currently not SEC registered and do not report to the SEC or another U.S Banking Regulator. Filing their S-1 statement gets them SEC registered and then they will follow the stricter and more transparent reporting requirements of the SEC in their Annual & Quarterly statements.
Hope that helps.
Okay, Lucky's is filing for bankruptcy. In itself, that looks pretty bad...
...however, you completely chose to ignore the fact that while they are closing 32 of their 39 stores, they agreed to sell 6 stores to Aldi's and another 5 to Publix.
So 30% of those closures are going to remain open, albeit under new branding. Who knows what supplier agreements get terminated and which live on with these 2 new grocers. VATE could perhaps live on and sign even larger deals with Aldi's and Publix.
You don't know and either do I, so to infer that it is a failed "pipe dream" is a stretch.
I don't see that happening. Too much growth over the last year to see the share price fall down to those levels.
When the annual and Q1 report this year are filed, that will be very indicative of where VATE is heading - up or down. My bet is we'll continue to see growth.
Agreed - I share your sentiment. There is a real action plan to VATE and they are executing on that strategy, step by step, piece by piece.
I've said before, 2019 was a transformative year for the company. Much of the foundation has been laid and now it's time to stack the bricks.
Correct - however there are multiple reporting standards that are allowable within the QB:
SEC Reporting Standard
Regulation A Reporting Standard (Tier 2)
U.S. Bank Reporting Standard
International Reporting Standard
Alternative Reporting Standard
The SEC Reporting Standard is really the most desirable though, at it's the most transparent and considered the standard in the US investment industry. Also by transferring to this standard now, it makes additional upward exchange movements more feasible perhaps in the future.
S-1! Another important step for corporate governance and transparency!
Yes, I've seen this, thanks for re-sharing.
Makes sense that they would partner with a firm like StoneBridge, given their appetite to uplist to a larger capital market as well as their quest for a strategic partnership and/or acquisition.
It's going to remain in this .06 - .12 range until the annual report or news of landing a massive agreement with a MFO or something else - be in an acquisition, strategic alliance/partnership, etc.
They weren't huge up days, but rather a fairly small gap up over the course of a month.
Also, if you purchased VATE at .16 over a year ago, shame on you for not looking at their books at that time.
This is not the same company it was then. More mature, more focused, more products.
Good luck with your axe grinding.
Take your pick - any of the days from December 1st through today, which saw VATE go from a low of .012 to a high of .024. Those days.
Great post.
Very valid point.
Thanks for the insight. I was trying to pack in to how many 16.9oz cases could be put on a pallet, was difficult as depending the manufacturer, they stacked more on a single pallet.
So I backed into it using math that your average pallet could hold 100 cases of 24, 12oz cans. Got the total oz volume then kept slicing.
I have an a post from yesterday that broke it out, would be interested in seeing your thoughts.
If Outwest505's volume is any indication of how the other distributors are doing, then yes - sales are doing well and that is good news.
If you or I were to buy 8 pallets of CBD Iced Tea, at retail pricing, that would cost about $58,504. Again, that's RETAIL pricing.
Of course Outwest505 is buying it at wholesale pricing, maybe at a 30%-40% discount from retail, putting that sale contributing to VATE's bottom line at $35,102. - $40,952.80 A MONTH.
That means ONE DISTRIBUTOR is adding $105K to $123K of income to VATE on a quarterly basis.
That's just the story from a single distributor. How many distributors does VATE have, 18? Of course not all of them might be doing this type of volume, but it absolutely does give us an indication into the type of growth VATE should see in 2020.
You hit the nail on the head, for sure.
At least in the United States, there is still so much legislature that needs to happen at the federal level regarding the legal scheduling of Cannabis and CBD. As each state legalizes recreational and medical use of Cannabis and CBD, they are all doing it their own way, within a framework they feel works. The federal government needs to come down and establish clear rules and procedures - and most importantly remove Cannabis from it's current Schedule 1 classification.
As it sits, Cannabis is on the same level as heroin and ecstasy. Crazy to think about right? That means the banking industry can't touch the money of companies that deal in Cannabis or they risk federal prosecution. That means payroll companies, like ADP, risk federal prosecution by processing a Cannabis firm's payroll. There are many financial hurdles and barriers like this that need to be removed for the industry itself to flourish.
All these things considered, I also agree with you that SRNA is undervalued even in it's current state. The floor here should be .10 - .15 and if their 2019 annual can show a net loss that is anything around $250K or less (which would mean the Q4 net income was positive again), then I think this could get even better.
How do you not read through the lines and see a 5 pallet order followed by 8 pallet repeated monthly orders as a good account?
That's VOLUME.
I'm lost by your point.
I think it's going to take a couple of things.
First, when folks think of the CBD / Marijuana buzz, I'm not entirely sure that the majority of the investing public also thinks about the full process. Most eyes are likely on the firms actively selling Cannabis and CBD, not necessarily the firms like SRNA which provide the HVAC and the infrastructure for those firms to operate. That will change with time.
Also, keep in mind, SRNA has only just had back to back profitable quarters in Q2 and Q3 2019 - however, they have not been profitable from the longer term. From what we read during the Q3 10-Q filing, we know they still had a net loss of $538,557 through the first 9 months of 2019. They had a tough loss of about $900K in Q1 of 2019, that was hard to rebound from for the year. Their strategy has shifted, specifically with the focus on multi facility operators and their revenue targets / backlog are certainly improving. This is on the upswing, without a doubt. I'm hopeful that they had another profitable Q4 2019 and closed the gap on that 2019 annual net loss. Would be fantastic to see them have Q4 net income of 300K-400K or more.
I think lastly, it will serve them very well over the long haul to get off of the OTC. SRNA has some ambitious goals to establish a strategic alliance or acquisition within 2020, while also growing their product portfolio and backlog. Their longer term vision for next year is to create a fully fledged NASDAQ listed company. That provides a sense of legitimacy to their operations and gives investors confidence.
In my opinion, SRNA is in the right industry, at the right time, with a focused and dedicated management team - all it's going to take now is time to grow out their operations and hit their goals. With more and more states legalizing medicinal and recreational use of Cannabis, CBD coming in to the picture, and with Canada having just allowed the legal sale of THC infused edibles from December 2019 - there are a tremendous amount of opportunity for those in the HVAC space within the Cannabis industry.
Agreed, that should be the focus here.
Outwest505 just ordered 5 pallets of product - by my math in an earlier post yesterday, that's right around 710 cases of VATE 12pck Iced Tea product.
When they move to order 8 pallets, on a recurring monthly basis, that's about 1136 cases of VATE 12pck Iced Tea.
Sure, the partnering with an arena soccer team is a little buzz, but the real thing to focus on in that PR is the increased volume of sales.
The most recent PR from the 10th gives us a good opportunity to see the types of volume VATE is doing.
In the brewing world - a quick google search would tell you that, on average, a pallet can hold 100 cases of 12floz product. Each case is defined as 24 cans. So let's do some quick math on that:
100 cases x 24 cans = 2,400 cans.
2,400 cans x 12oz = 28,800 total fluid ounces per pallet.
Now VATE's CBD Iced Tea product comes in 16.9floz bottles and in 12 packs, so let's back into that as best we can.
28,800 total fluid ounce full pallet / 16.9floz = 1704 bottles~
1704 bottles / 12 packs = 142 cases of 12pack VATE Iced Tea per pallet.
Now of course this is all a rough estimate, the size (read height) of the bottles I'm sure also play a factor -- but for argument's sake, let's just say each pallet does indeed have 142 cases.
Outwest505 was at 5 pallets a month - so they were purchasing about 710 VATE CBD Iced Tea cases per month (5 pallets x 142 cases).
Now on the retail side (for folks like you or I) each case costs $51.50 for the consumer -- so that's a steady monthly purchase of $36,565 Teas (710 cases x $51.50 per case). Or broken out another way, if you or I would get a pallet delivered to our house, it would cost $7,313.
Now clearly, this is not what Outwest505 or any other of VATE's distributing partners are paying. As they clearly get a wholesale discount when purchasing their cases / pallets. For anyone who has a better understanding of what the wholesaling process is like:
If the retail consumer would pay $7,313 per pallet, what would a distributor like Outwest505 be paying?
Great post and to add in - I think so much of what you state below covers their CBD lines of beverages.
When you tie in their actually coffee line of beverages - the hemp coffee, hemp tea, the private label coffee, and the single serve market .. those business lines are the icing on the cake.
2019 was a fantastic inflection year for VATE and I'm very much looking forward to 2020.
Broke .027 today
.0255 by 1/10
I only have Level 2 access through the OTC website (which isn't perfect).
Odd to see CDEL being the one to gap up the stock today, but I'm not complaining!
I viewed anything under .03 a steal. Wish I had any capital that I could have continued to buy low on. Excited for 2020.
I know you're a glass half empty kinda guy when it comes to VATE and that's fine.
That said, if forced, could you not see any positives when it comes to their business plan and future outlook?
Ha, I don't post too often, but when I do, I try to make it meaningful and from a larger macro perspective. I have a very much "set it and forget it" investing attitude. I don't typically look at SP every day, I might look at it once a week or so.
I think what you are seeing with VATE is that it is still very much in a Start Up mentality - except it's a Start Up that is publicly traded versus Privately owned.
I think anyone that is familiar with running a business, especially a new business, knows that nothing ever goes exactly to plan. 9 times out of 10 - every pivot, every new idea, every new product - they are going to take longer and cost more than originally anticipated.
VATE likely went public for access to capital, since traditional financing via normal banking institutions isn't there yet, for all the legal reasons noted on this board. So being a publicly traded start up, we as investors are more keenly aware to see the bumps in the road a new business typically encounters.
The products are there, the mission is there, the infrastructure is there - VATE is doing things the right way, they are executing, and before long we'll all be able to reap the benefits.
Interesting feedback / thoughts. All very valid points. A couple of responses:
I agree its critical for VATE to continue to get products into those different retailers you mentioned and the reality is that yes, many of the distributors are smaller ones. That being said, I think as we get the regulation & legality items addresses, they are much larger national distributors that could be interested in carrying VATE's line up of products.
Beyond that, to your point on different coffee/teas and the different ways to take CBD. I, personally, think that's all preference - wouldn't you? For example: some people love buying plain roast black coffee and then adding their own Coffeemate French Vanilla sweetener to it. Other people like buying pre-flavored French Vanilla ground coffee and adding nothing to it. I think this example definitely holds true in the CBD space. Some people will like to add their own CBD, to their own liking. Other people want it all done ahead of time, so they don't fuss around buying seperate tinctures and adding it themselves. It really comes down to preference.
And that's where VATE has sort of doubled down. Via there Zoe CBD brand, you can buy your separate CBD tincture and add it to your Elev8 coffee / tea if you so choose.
You are right that the variety of the products is there. Now the proof is in the pudding to see how successful of a brand it can become.
I have a hard time understanding the negative lens that some choose to view VATE with. Glass half empty I guess. Let me offer a different take.
From my perspective, 2019 has really been a transformative year for VATE - from product expansion, revenue growth, business maturity, and share structure. We've seen VATE go from just a hemp bagged coffee / boxed tea bag company selling mostly on Amazon and a few local shops, to a full blown hemp / CBD beverage company across multiple states. Let me do my best to try to recap where VATE was at just this time last year and how they have come forward.
Product Expansion
January 2019: VATE acquire's Blessed Bean Coffee, to own the full manufacturing process from bean to bag (or can).
March 2019: VATE officially launches their bottled CBD Iced Tea and canned CBD coffee.
September 2019: VATE enters the single serve coffee (Keurig) market via Blessed Bean. Increased their presence in the private label market. Developing CBD whole bean coffee.
October 2019: VATE announces additional Peach, Hibiscus Green Tea, and Raspberry CBD Iced Tea flavors (which as of this post are now available for pre-oder).
Revenue Growth
Annual 2018 Revenue: $372,305
Annual 2018 Net Loss: ($367,815)
Through Q3 2019 Revenue: $521, 092.82
Through Q3 2019 Net Loss: ($187,294.74)
What does this demonstrate you ask? To me it's showing that VATE is growing organically and as more product goes out the door, their economies of scale are improving and their overall COGS is remaining flat / favorable. VATE lost almost as much as they made in 2018. Now look at that improvement, only through 3 quarters, in 2019 - it's a strong indicator of how they are executing on their business model, which goes to my next point.
Business Maturity
In 2019, VATE has basically gone from selling as a preferred vendor on Amazon and a handful of Lucky's Markets, to operating across multiple states leveraging multiple distributors. This includes partnering with Chex Finer Foods as well as the 13+ distributors that VATE has partnered with throughout 2019. Additionally, VATE took a hard look internally and divested the 02 Breathe LLC business (which previously strongly contributed to top line revenue @ $220K annually), to concentrate on their core competency as a beverage company. When recognizing this, it makes the product portfolio revenue growth even more incredible. Lastly, VATE did their market research and took the time (and expense) to upgrade their SEO, website, product logos, and overall marketing to better target and penetrate their consumer base. The growth here in 2019 is nothing to sneeze at.
Share Structure
Shares at the end of 2018: 445,524,276
Shares as of November 5 2019: 567,672,378
Preferred Series D Share Retirement in Q4 2019: 2,746,732
^These preferred shares converted at 60:1. This effectively retires 164,803,920 of potential dilutive common shares.
So let's look at this objectively. Yes, over the course of 11 months in 2019, VATE added 122M shares to their common shares outstanding. But, how was that money used? Did they pay executives crazy bonuses? No. Was it because of toxic convertible debt? No. Those shares were issued, to raise money, to execute on their business plan. The revenue numbers and all the items in the section above, are wholly reflective of that.
Conclusion
When I add this all up, I only come to one conclusion. VATE isn't a scam. VATE isn't a pump and dump. VATE isn't your overnight pipe dream / run of the mill OTC company.
At the end of the day, VATE is still in the Start Up phase of it's business life cycle. They've taken the steps and laid the foundational groundwork in 2019 to set the company up for future success. In the eyes of an average OTC investor, this has taken to long. For those of us that can read through the lines, VATE is doing exactly what it needs to do and eventually, share price will be reflective of that. I'm sure many of you could even add to what I've laid out here, in terms of positive developments. Overall, I'm happy about their 2019 and I am excited to see how 2020 plays out.
*Re-posted to reflect accurate Net Loss for 2019.
My mistake, you are correct. In the past VATE had done ( ) around losses, so I expected to see a ($40,038). However, they instead put the negative sign in front of the dollar symbol, as -$.
Good find. Hopefully I can still alter my original post to reflect that.
It's a good question and it's one that a lot of people have been asking, for a long time. Just talk over to the folks at NORML - they've been pushing Marijuana reform since 1970! And we've only seen REAL movement in that space in the last 5-10 years.
I think in regards to VATE - it's a two pronged answer.
First - specifically to Hemp and CBD, there is the legislative issue and the education issue. Both are moving in the right direction, but as I mentioned with NORML, it really takes time to get studies funded, published, and have that information circulate to the masses. It got kick started with recent legislation and it's moving that way, but it takes time - usually more than we'd like. Not only is the education / legislation to get the benefits of Hemp & CBD, but then its the banking regulations for companies that want to operate in that space.
Secondly - when it comes to companies to invest in and stock interest .. there are quite literally HUNDREDS of different companies out there, some private, some public, that are in the Hemp / CBD space. It's very difficult for the common investor to separate through the junk, to find the rare diamonds in the rough - that are trying to differentiate themselves from the rest of the heard. Also, I think the overwhelming majority of the investing public are scared of investing in the OTC space - due to the obvious risks. Most people will wait until a company makes it do a Nasdaq or equivalent listing - as meeting the requirements for those exchanges puts confidence in the financials published.
As a quick aside - I have a friend who recently started working for CuraLeaf. CuraLeaf is in the Marijuana Dispensary business- they make acquisitions from grow operations through retail stores. Their BIGGEST problem is banking. I was told that ADP (one of the largest payroll companies in the US) dropped them as a customer, as they did not want to take the risk of government action. This forced CuraLeaf to do payroll in house, which is a massive expense. We need more of these regulatory type issues settled to really see the market place normalize itself.