Right On Brands Inc (RTON)

[powerbattles]

HARBINGER RESEARCH Independent Investment Analysis price target $0.70 per share.
We Believe Right On Brands is, in fact, Right On the Money
with its CBD-Infused Beverages and Alignment with Beer
Distributors and Their Iron Grip on Retailer Shelf Space
Throughout the U.S.

Summary and Investment Opportunity
• High and Rapidly Growing Consumer Demand for CBD-Infused Beverages is Sweeping the U.S.
Trends in the U.S. pertaining to the cannabis plant (marijuana and hemp) have been nothing short of extraordinary
in the last few years, recently culminating in the December passage of the Farm Improvement Act of 2018, which
removed hemp from the Controlled Substances Act of 1970 and placed it under the control of the U.S. Department
of Agriculture as a legitimate farmed crop. While hemp has been used for centuries for its strong fibers in the
making of rope and other goods, it has recently become far more widely used due to a therapeutic compound it
contains called cannabidiol (CBD). The basis of one FDA-approved treatment for epilepsy, non psycho-active CBD
has been shown to have myriad benefits pertaining to relaxation, pain relief, and in the treatment of addiction to
opioids and nicotine. While not FDA approved for these uses as of yet, products containing CBD have taken the
market by storm, and will by some estimates constitute a multi-billion dollar market in the United States by 2021.
• RTON Has the Winning Combo for Success: Top-Quality, Delicious CBD Beverages and Strong Distribution
Right On Brands is an emerging leader in the production of beverages, snacks, and oils containing CBD, and has
recently made strong distribution inroads with regional and local beer distributors that are actively seeking such
high-growth products to sell through their existing retail channels. Given that these distributors have an iron grip
on much of the shelf-space RTON needs to sell its alkaline hemp water products and hemp oils, we believe that
the Company’s recent string of new distributor alliances has already put it well on its way to having a national retail
footprint. Furthermore, initial anecdotal evidence suggests excellent sell-through of these products, with several
distributors already placing follow-on product orders just weeks after signing on and placing their first product
orders. This can only be interpreted in one way, in our opinion: RTON has a winning combination of product taste
and quality and national distribution strategy.
• Rollout of Franchise-like Branded Wellness Centers Strengthen and Diversify Revenue Base
In addition to its core wholesale sales effort, the Company has plans to make a major push into online retailing,
where its gross margins are over 80% (net of shipping costs), and into licensing its ENDO water brand via a
franchise-like model to retail entrepreneurs seeking to capitalize on the consumer demand craze for all things
CBD. Licensees under the Company’s program can launch a retail store in just 60 days from signing and for as little
as $50,000 in capital investment, which includes $30,000 of initial product purchases from the Company. Under
the Company’s pricing model, both it and its licensees can expect to earn gross margins of approx. 50% from retail
sales in these “Wellness Centers,” providing an exceptional, high-margin sales channel for the Company and a solid
high-margin opportunity for licensed operators.
https://d1io3yog0oux5.cloudfront.net/harbingerresearch/media/57b192bd1d88993a78b4da08714e0c45.pdf