New O/S out, 1.205b. Higher than last one but I also am honestly OK with it and it's materially consistent with what my expectations were. We learned in the last 10-q (Q1 2020) that BBRW had a significant derivative liability in the form of convertible promissory notes yet to be converted, which I interpreted as having been necessary to fund working capital during a time of both business growth and the start of the pandemic -- not ideal, but seems like the right decision. As such, there were always going to be new shares hitting these past few weeks, and the scoreboard as of right now is saying it's not as bad as it could have been.
Based on my (rough) math, taking into account all convertible notes listed in the last 10-q with due dates that had passed as of 3/31-Q, there were another ~925m shares yet to convert as of the last O/S update. (See note #4 in the post to which I'm responding.) Plus the 509m O/S at that time = 1.434b shares O/S. We do not yet know how many shares converted from notes (or that may have been issued by BBRW/converted from pref shares), but there are two explanations (not mutually exclusive) in my mind as to why the O/S in 1.2b and not 1.4b+:
1) Share repurchase has, in fact, commenced. Based on average prices (absent the spike) over the past 2-4 weeks and the volume caps within which BBRW would need to operate, 200-300m shares repurchased is quite realistic.
2) BrewBilt has repurchased, repaid, or otherwise retired certain convertible notes that were past due, precluding their conversion into common shares.
I'll be honest, the strangest thing about BBRW for me has been the PPS spike (now retreated) over the last couple of weeks, since it happened with seemingly no catalyst (I understand there were technical indicators, but I lean fundamental). Besides demonstrating that there are still plenty of investors interested in BBRW, this O/S update changes nothing for me; had it been 1.5 or 2b, it would have. From here, assuming the O/S stays relatively flat or even can be reduced further, it's a matter of BBRW executing and not getting shut down due to covid. I continue to think that these guys can reach an enterprise value of $15-25m by virtue of releasing one good 10-q, meaning additional untapped upside beyond that, and everyone here can do that math with 1.2b O/S.
Anyhow, we shall see. Q2 and Q3 revenue and the avoidance of significant additional dilution will really make or break the rest of 2020.
