RMN enjoy the drink and rest of your vacation. When it comes to revenue recognition, the biggest question on this board, my sense that we will see little to no revenue recognition isn’t a result of how the proposed acquisitions are being undertaken. It is rules under GAAP. A company cannot recognize revenue until they have sold and been paid for goods rendered. In SGMDs case, they may have purchased goods for their end users, which is recorded as an expense. Then when SGMD actually sells the goods and has cash in hand so to speak, does it get recorded as revenue. Therefore when SGMD says they ‘expect’ revenue recognition of ‘x’ dollars, it is based upon assumptions (supply / demand ) that their end users will accept and PAY for goods when received. Company’s often overstate their sales pipeline saying they have sold millions of dollars of goods, have signed contracts worth ‘Y’ value, but until cash in hand, no revenue recognition.
To be clear this is only my opinion. It is very difficult to determine the SGMD revenue recognition flow based upon previous filings. You can track the actual goods purchased (expenses) then where payments were received (revenue). But the SGMD end user base isn’t as broad as one thinks and demand isn’t as expected. What SGMD appears to be doing is creating multiple entry points via acquisitions to a still unknown industry and have solutions in place for the marketplace. Accommodate as much as you can with the expectation the need will be there and you have the cash on hand, and share structure, to withstand delays. It is still a limited market and evidence shows numerous entities like SGMD are building their house on expectations. If certain legislation gets passed on timely basis across the country, then SGMD stands an excellent chance to become very successful. If this process drags on endlessly, you might have a house, but no money to buy furniture and keep the lights on. Classic entrepreneur dilemma. All said, I’m long and expect this to play out over the next 9-12 months. Shareholders are taking a beating and that’s the chance you take in penny land. The MM’s want you to sell as they accumulate for their own needs and greed later on. Cheap inventory for them, again IMO.
