Repost... Ya see, the problem is, you are confusing WNBDs "type" of business with companies like a medical device manufacturer, etc
Often, those types of companies/products see their costs skyrocket as they grow cause EACH unit costs a lot of $$$. Theres a high degree of discrepancies (quality control/assurance). They require secure storage facilities to store units finished and unfinished + replacement parts. They require a growing technical support staff to handle new customers. The product is not CONSUMABLE so you are constantly working on new leads (large sales staff) to MAINTAIN revenue. Theres engineering/manufacturing/capital equipments costs and reengineering/retooling is constantly needed to compete in a competitive market, etc, etc
WNBD on the other hand produces a very cheap product. A very small product that does not require massive storage and can be stacked vertically with ease. A product that has a very low discrepancy rate/long shelf life. A product that EVERYONE can use. A product that requires very little machine set up and can be produced at a rapid rate which reduces lead times/storage/long term planning that ties up free $$$ flow... and the product is CONSUMABLE, so each customer that you invest marketing $$ into there will be some that continue to use it, giving the company a constant revenue stream.
I am not an insider so i cant say for sure, but i have worked in the industry... I see WNBD's biggest savings coming from efficient marketing and increase raw material order volumes. There are ALWAYS high initial (per unit) costs for ANY small start up company, but IMO its logical to assume that the price per unit will decrease as order volume increase.. at least for this TYPE of company.
Having a marketing pro at the helm (Hawthorne) should instantly decrease marketing costs (after the initial costs to hire them), while increasing sales... Especially since the company wont be marketing via Hawthorne JUST to sell to new customers on the TV. They will also be supporting their existing retailers that have it on the shelf (+ the new unnamed USA mass retailer) and attracting additional new retailers at the same time.
IMO there is NO better "type" product than a low cost/high margin consumable with mass retail penetration... Some of you know that i HARP on this and there is a reason why. I've studied the various "types" of pennies for many many years and the only ones that i've ever seen make it are the ones with CHEAP products that can be sold at a rapid rate... and/or a small company supported by massive overpriced government contracts.
I have the examples/charts that support all this... Feel free to debate this subject with me, i enjoy it.
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2nd repost...
Ok, now lets look at this at another view...
INITIAL costs might rise as they expand, but so should the share price (higher lows), resulting in less shares needed to raise X amount of $$$
If WNBD lands a string of USA mass retailers and the PPS spikes and "bases" over .02... at a worst case 50% discount on the $1,000,000 they are allowed to raise per year via 504, it would equate to a max of 100,000,000 shares diluted per year.
WNBD has never used the full $1,000,000 in any given year, but if they HAD too because of higher stocking/marketing costs to support these retailers, it could result in MUCH less dilution... Like we are witnessing now @ .008+, compared to the triple zero/low double zero issuances.
What if the PPS could "base" over .03? $1,000,000 raised @ a worst case 50% discount(.01) = 67,000,000 shares issued per year
What if it "bases" over .05 one day? Only 40,000,000 shares will be needed per year to raise $1,000,000 (@ .025)
...but then again, if they get to this PIVOTAL growth stage, what is the likelihood that they will get offers with better financing terms/private placements? High IMO
This is an example of how if INITIAL costs go up, it does not necessarily mean there will be more dilution... 1 or more USA mass retailers would obviously increase costs initially (while being stocked/supported), but months later they could swing towards heavy profits and bring a lot of $$$ into WNBD, resulting in much less dilution and eventual buybacks (per Eric comments).
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