Great post on clearing of debt from Mathew12321... It is a legacy loan from the prior business that is a residual from the tri-party merger. The loan was originated from the auto-group not the cbd company and here is the quote from latest filing - "In each instance, the Note was issued not by the Company, but by the Company’s predecessor issuer, SND Auto Company Inc." which is another reason why the conversion rate can be renegotiated. The convert price was made prior to the reverse split as well which is another big piece of the lawsuit convo and gives more support to POTN's argument that .003 isn't "legal". Given that there has been significant fundamental changes to the company, share count post R/S, the trailing year of prices, and ownership structure this convert price is subject to be changed / negotiated. Worst case scenario is likely the following - POTN has already issued 146m shares to SND. Technically, the original agreement capped the shares gained from the conversion at 577m. That puts the balance of shares from the convertible at 431m shares. In the worst case scnerio the court will tell POTN it has to offer the remaining 431m shares at .003 which will raise 1.3m in cash leaving a balance of 0.4m on the 1.7m loan attached to this note. At that point POTN will be able to issue some shares openly to the market to pay the remaining .4m in debt. Let's assume they issue at .25 to raise that .4 that is an additional 1.6m shares. The company is now debt free and with no convertible. Now let's revisit share structure post this lawsuit - 600m shares right now essentially + 431m + 1.6m - 300m (common share conversion) = 733m shares and no convertible, no debt. In that scenario a quick dirty valuation would look like this - 30m rev in 2018 * 20x industry rev multiplier (this is actually a bit lower than industry) all divided by 733m shares you get a fair PPS of $0.82 or 173% gain from current price. Now I don't think any of this will happen. I think POTN will get a way better deal and will be allowed to renegotiate the conversion price to 0.25 a share instead of .003. In this case this is the quick math on share - 1.7m loan divided by .25 = 7m shares + 600m current shares - 300m (common conversion) = total all in share count post lawsuit and conversion of only 307m shares. The simple valuation logic here would be 30m rev * 20x rev industry multiplier / 307m shares = fair PPS of $1.95 a share or 550% gain from current price.
No matter how you slice it we're poised to make a ton this year.
Any posts are just an opinion and should not be taken as investment advice. Always do your own DD
