RCHA Dividend of HPGN at $1.00 Parallel Valuation…
Before reading any further, please, understand this is simply a model that I created to help one understand the valuation that exists here in RCHA and how such could be deciphered. These thoughts are not the gospel and should be used only as a tool to consider a part of the growth of RCHA from this HPGN dividend.
RCHA filed an 8-K with the SEC on July 12, 2017 to give shareholders a dividend of 5,000,000 shares of Mega Bridge, Inc. which has changed its name to HypGen, Inc. which is currently sitting at $1.00 per share under the ticker of HPGN:
Mega Bridge, Inc. Announces Name Change to HypGen, Inc. and New Strategic Direction https://www.benzinga.com/pressreleases/17/07/m9778087/mega-bridge-inc-announces-name-change-to-hypgen-inc-and-new-strategic-d HypGen has been assigned United States Utility Patent Application No. 62/420,177, filed on November 10, 2016 titled "Compositions and Methods of Use of Phorbol Esters for the Treatment of Parkinson's disease." The Company plans to conduct clinical studies to assess potential treatment options for Parkinson's disease based upon this intellectual property platform.
The dividend will create what I call a Parallel Valuation (PV) to exist. Parallel Valuation (PV), with this situation, is when the valuation of one stock will be predicated upon the existing ”corresponding” valuation and/or share price of another stock to determine where a stock could logically trade or be worth per share. So, this is when a certain valuation is generated in a company’s shares through the issuing of a spin-off of shares in another existing stock that is at a certain price of trading or that will eventually trade at a certain price or value.
Let’s look at HPGN which we will use the recent price of $1.00 per share for HPGN and a considered presumed .001 per share price for RCHA throughout this post to keep the math simple for understanding the concepts that I am about to explain. If any of these variables later change, please use the Substitution Property to replace and recalculate what fits the existing situation.
First, we must determine the Distribution Ratio for the dividend in HPGN. This will be done by dividing the Outstanding Shares (OS) of RCHA (838,879,628 shares per last 8-K filed) by the 5,000,000 shares to be given of HPGN as indicated below:
To keep the math simple, I will round the OS to be 850 million shares which is slightly higher than the recently confirmed OS per their 8-K:
This means that for every 170 shares of RCHA you buy, you will get 1 share of HPGN. So, theoretically, 170 is the Distribution Ratio for the HPGN Dividend.
So…
170 RCHA Shares = 1 HPGN Share
170 RCHA Shares at .001 = .17 1 HPGN Share at $1.00 = $1.00
This means that… for every .17 you spend in RCHA… you are going to be given $1.00 in value of HPGN.
So…
Let’s presume that you own 10,000,000 shares of RCHA. This means…
10,000,000 RCHA Shares ÷ 170 HPGN Distribution Ratio = 58,824 HPGN shares
58,824 HPGN Shares x $1.00 Price of HPGN = $58,824 HPGN Valued Owned
This means that if you spend $10,000 into buying RCHA (presumably at .001)… for 10,000,000 shares… you are going to get 58,824 HPGN shares… that you will have $58,824 in value in shares of HPGN.
This is also including the fact that you will keep your original RCHA shares which I would suspect will continue to appreciate as more investors learn of what’s being offered for simply being a shareholder.
So…
$10,000 of RCHA = $58,824 HPGN + $10,000 of RCHA
$10,000 of RCHA = $68,824 Total Value
Now the question would be: How do we determine the price I need to purchase RCHA up to until it reaches that Point of Equilibrium that equates to 100% of money invested that’s compatible with its dividend exchanged stock, HPGN?
There are a few ways to see this. Let’s further analyze…
The Point of Equilibrium is what we are trying to determine for RCHA at a presumed share price of .001 and with HPGN at $1.00 per share. This is where buying shares on RCHA will have an equal value equating to the same equal dollar value in proportion to the distribution ratio of 1:170 for HPGN shares to RCHA shares.
Or another way of looking at this… How many shares are needed to be bought of RCHA at .001 to equate to 1 share of HPGN at $1.00 per share. To get this, divide $1.00 by .001 as indicated below…
$1.00 ÷ .001 = 1000 shares of RCHA = Point of Equilibrium
To understand how RCHA is still significantly undervalued, the logic here is that you will need to buy 1,000 shares of RCHA to equate to the value of 1 HPGN share that you will be getting. The logic for understanding the undervaluation that exists here is that even though the Point of Equilibrium is when you buy 1,000 shares of RCHA… we are only needing to buy 170 shares, which is far less than1,000 shares, before being awarded the $1.00 per share value of HPGN.
To add, even when you buy 1,000 shares of RCHA at .001 per share… and it’s the Point of Equilibrium for 1 HPGN share… it’s still a minimum of a 100% gain even after building up to such point.
Here’s another way of looking at this… if one was to pay 170 x .001 (.17 per share) for RCHA, such would be the Point of Equilibrium for where you would need to buy that certain amount of shares needed to equate to the value of the HPGN $1.00 per share dividend to be awarded.
1 share of HPGN would cost you $1.00 per share. To get a better understanding of the power of Parallel Valuation, we must determine how much an equivalent price would be of RCHA shares.
So…
Why would you go out and buy 1 share of HPGN at $1.00 when you can go buy 170 shares in RCHA and get two investments for the price of one; the same HPGN value plus the additional RCHA value?
As I had indicated above, 170 is the RCHA share amount multiple to use to determine another point of equilibrium to see how it relates to Parallel Valuation. This means that 170 shares of RCHA theoretically equates to 1 share of HPGN. Let’s further explain the importance…
Price paid for 1 share of HPGN @ $1.00 = $1.00 Price paid for 170 shares of RCHA @ .17 = .17
1 share of HPGN @ $1.00 = 170 shares of RCHA at .17
By dividing $1.00 by .17… you can get the price of undervaluation for RCHA in being compared to where it would need to be bought up to for being considered at a point of equilibrium for the value of the HPGN dividend that’s being awarded.
$1.00 ÷ .17 = 5.88 Times RCHA Undervaluation Ratio
.001 x 5.88 = .00588 per share for RCHA Point of Equilibrium
This means that with RCHA at .001 per share, it is 5.88 times undervalued the level that it would be needed to trade to where it would exist simply as a 100% gain for being equal to the $1.00 per share value that the HPGN dividend would be distributed.
This means that even if you were to buy RCHA at .00588 per share… you still would be getting a 100% return on you investment per the HPGN dividend.
This would be the same as like one spending .17 and being awarded back $1.00 in return. This means that RCHA should be bought up to the price of .00588 per share sine that is where it would equate to obtaining a 100% gain from that level from the $1.00 in value for being awarded the 1 share of HPGN. This is another way of determining the point of equilibrium.
RCHA would be considered undervalued at such point of equilibrium has been obtained and even beyond such point.
Because of the logic with Parallel Valuation, the price of one will create a direct correlation to the price of the other. Because of the Float of HPGN being absorbed or nearly gone in my opinion, it would not take much for the price of HPGN to remain stabilized at the $1.00 per share price range or even higher if later any buying is done which would significantly enhance the value of RCHA immediately.
Also, with the Parkinson’s Disease approved patent for HPGN, I think the price is going to go much higher than $1.00 per share. This means that since HPGN would not come down to the level of RCHA, such would therefore force RCHA to reach an immediate increase in share price and an immediate increase in valuation.
Receiving a dividend in HPGN would be very explosive for us RCHA shareholders. The key to really get things excited here for us RCHA shareholders would be for the Date of Record to be announced which would mean that it was approved by FINRA for distribution. In my opinion, stay tuned…
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
