once again - the announcement on the LOI on Wholesoy lacks specific transparency. from announcement:
"BETHESDA, MD--(Marketwired - Dec 8, 2014) - Nutroganics, Inc. (OTC PINK: NUTT) ("Nutroganics") announced today that it has signed a letter of intent to acquire certain assets of Wholesoy & Co. of San Francisco, California.
Wholesoy is currently the leading organic, non-gmo verified, soy yogurt brand, and is distributed nationally to leading natural foods retailers such as Whole Foods and specialty grocers such as Fairway Market. Wholesoy generates approximately $7 million in annualized revenue. Nutroganics anticipates that the acquisition would be accretive immediately on a revenue per share basis and, after a 120 day transition, would be accretive on an EBITDA per share basis."
what is the specific asset NUTT is requiring and how much of the $7MM in annualized revenue Wholesoy generates does that represent...? upon the first and second read of the PR - it could easily read that NUTT will be adding $7MM of accretive revenue with the acquisition should it go through. however, that is not the case or it certainly doesnt appear to be that way.
so - what asset(s) are NUTT shareholders acquiring and what are the annualized revenues of THOSE assets? is it the recently built manufacturing facility to replace their previous 3rd party supplier that abruptly closed their doors (per Wholesoy's website)? that facility was largely paid for by Wholesoy's owners and then what appears to be "rescued" by a $400K loan from Wholesale Foods for completion. it would make sense if NUTT acquired this facility and then contracted the production back to Wholesoy which would be consistent with the acquisition of the Colorado facility. if NUTT has operational competency that would allow them to run the facility in a more cost efficient and productive means - than this acquisition makes sense for both parties involved. it would also pair up with their existing core business (unlike the Alpha Helix acquisition) which would/should lower operating costs for both companies.
what shareholders need to know to really understand this M&A deal is what is being acquired, at what cost, what the specific revenues are for these asset(s), and how the company (NUTT) is paying for the asset(s). are we paying in dilutive stock, is this from cash with the previous capital/loan increase from Crestmark? when will these numbers be shares with the shareholders? is this part of the 2-4 year full compliance/reporting plan where we wont be privy to the details until long after the fact?
this certainly could be a very positive acquisition for both parties and ultimately for NUTT shareholders. however, once again, the announcement lacks specific and necessary details for shareholders to evaluate how their money is being spent. further, with the history of the company/insiders in NOT following up with these types of announcements (what happened to the LOI with Gardenburger...?), it still does not push the mgmt team over the credibility hill which they have to date - not been able to gain any traction.
i would use the stock price as a measure of this credibility gap. on the surface, with reported numbers since they published through pinksheets.com. the top and bottom lines are both improving and show a trend towards sustained profitability that could provide attractive returns for shareholders. however, these trends and recent announcements have had NO effect on share price despite what appears to be a strengthening risk/reward scenario. why? i would continue to argue it is the past lack of transparency of the insiders and the continued lack of transparency with these deals (no 8K for capital raise, for acquisitions, etc) providing the background shareholders need to really evaluate the "health" of this company and whether or not the improving top and bottom lines are fundamentally sound and not a house of cards ready to implode under a mountain of debt or runaway dilution.
if mgmt want the trust and respect of shareholders and new investors - they MUST provide more and specific details on these deals and funding so that shareholders can due their own DD on how these deals change the individual risk/reward scenario.
AI
