Replies to post #30149 on Nate's Food Company (NHMD)

[surfkast]

It appears they are hiding the true share structure also!

[Greenaccountingbean]

Thanks for all the replies. The corporate structure clearly makes this public company a lot more riskier to investors at the expense of the owners/founders. This often doesn't end well for the initial public entity investors but it could still do OK IF... Obviously a lot of IFs.

[Games-Ludus]

Nate's Conflict of Interest Could Hurt NHMD Shareholders

There is some really good Due Diligence (DD) flowing through this thread.

Nate is the CEO of NHMD, and is also one-half owner of Innovative Brands. NHMD has the option to purchase the intellectual property for Nate's Pancakes, for preceding 12 month revenue, from Innovative Brands. The conflict lies in the fact that Nate has to decide whether to represent the interests of himself or of NHMD shareholders. If he pays himself 12 month preceding revenue it could be virtually nothing, or he could hold out and for $7,500 per month and $1,000,000 per year. This would be taking money from the pockets of NHMD shareholders and stuffing it in his own pocket. NHMD is hobbled under this scenario and Nate should have transferred this rights when the company was organized. At this point, the absolute only proper thing to do is for Nate to immediately transfer the rights to the company to NHMD or he could sell his share of Innovative Brands to NHMD, eliminating the egregious conflict of interest. By the way, the fee started June 1, 2015. See excerpts below, taken from the Form 10/A dated October 3, 2014.



"Innovative Brands owns the intellectual property rights related to products licensed by the Company and is owned equally by Nate Steck and Marc Kassof.
The license agreement is for a term of twenty (20) years. The Company has the right to renew the license agreement for successive ten (10) year period by paying $1,000,000 for each new term.

Payments/Royalty

The Company shall pay a royalty equal to Seven and One Half Percent (7.5%) of the Gross Revenue from the licensed products. Gross revenue is defined as total revenue minus discounts and allowances. In addition to the royalty, the license requires that the Company pay a $7,500 monthly fee beginning twelve (12) months from the execution of the license agreement. Thereby the fee shall begin on June 1, 2015.

Product Ordering

The Company is able to purchase the raw materials directly from 3 rd party suppliers and manufacture the product. The Company may also develop and create additional flavors such as chocolate, blueberry, or strawberry.

Buy-Out

The Company also has the option, at its election, to the purchase the intellectual property associated to the license agreement. The buy-out amount is equal to revenue for the 12 months immediately prior to the buy-out."


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