Yeah, then after that deal, focus on Hempistry...
This is all hypothetical but let's say SGMD does a reverse merger with Hempistry. Hempistry has 2600 acres under its belt. Say those 2600 acres yields the highest CBD oil which fetches about $30 to $40 a pound.
2600 acres yields 2,600,000 pounds (1 acre equals 1000 pounds) that would value Hempistry at around $78,000,000 to $104,000,000 without any multiples. Add a 4x multiple for a private company and we're looking at $312,000,000 to $416,000,000 in value. Add a 7x multiple for a public company and we're looking at $546,000,000 to $728,000,000 in value.
I'll use the low end of a private company with a 4x multiple as an example, which equates to $312,000,000.
Hempistry is valued at $312,000,000. As part of the reverse merger, Hempistry gives us 1 share of Hempistry for every 7 shares of SGMD. Hempistry has 100,000,000 shares outstanding; SGMD has 700,000,000 shares outstanding. 1 for 7 pretty much takes over all of SGMD stock equally.
So now Hempistry is public with an OS of 100,000,000 and a value of $312,000,000 which should eventually increase to $546,000,000 for a public company using the 7x multiple (using the $30 per pound number) with an initial pps of $3.12 but increasing to $5.46 per share.
Now add in the value of SGMD. Say all the business under Sugarmade brings in $40 million annually with a 7x multiple; that's an additional $280,000,000 value. $546 mil + $280 mil = $826,000,000 value; which turns out to be $8.26 per share (or $78,000,000 + 40,000,000 = $118,000,000 x7 = $826,000,000).
This is why reverse mergers are lucrative. If I have 100,000 shares now, after the reverse merger I'd have 14,285, valued at $3.12 ps...slowly but surely increasing to $8.26 ps.
Who here doesn't think that Hempistry and SGMD together is worth at least $826 million? You have a 2600 acre hemp company marrying a hydro/cultivation supply and equipment company.
Purely hypothetical. Don't know for sure how reverse mergers work, but I'm pretty sure it's close to this.
Someone get Jimmy and John Vu on the horn and tell them get this deal done!
