Hey investors, interesting day to be an Asset Allocator as the market gives back gains, but still the sentiment of the street is bullish:
- S&P 600 (USA Small Caps) down by 0.9% and S&P 500(USA Large Caps) by 0.84% for the day
- S&P/TSX 20(CAD Small Cap) up by 0.95% and the S&P/TSX 60 (CAD Large Cap) by 0.37% intraday
- Bitcoin down by 0.29% as investors move to precious metals for “safety”, Gold up 0.2%, and oil up 4.6%
- Demand for safe assets pushed the bond yields down for the day in both the USA and Canada, 0.01% and 0.02% respectively, pushing their prices higher.
|Market Close, Thursday, September 17, 2020|
|S&P /TSX 20
Gas Henry Hub
|CAD 20 Y
USA 10 Y
Today we have a big winner as the market bleeds some of those speculative gains :
Relevium Technologies (CVE: RLV)
|52 Week H/L : $ 0.075 / 0.01|
|Open : $0.04|
|Close : $0.07|
|Intraday Price Change: 180%|
|Day’s Volume: 33 Million|
|10 Day Average Volume: 75 Thousand|
|Market Cap: CAD 14 Million|
|Book Value: CAD 4 Million|
|Diluted Shares Outstanding: 147 Million|
|Sales TTM: CAD 3 Million|
Relevium is a publicly-traded corporation strategically focused on the acquisition of e-retail brands, products, and technologies in the health and wellness market. Relevium’s products are part of the $3.72 trillion-dollar global wellness industry — one of the fastest-growing worldwide markets. Our specific focus is on products that promote overall health, nutraceuticals, fitness nutrition, and cosmeceuticals.
Relevium operates through two wholly-owned subsidiaries, BGX E-Health LLC and Biocannabix Health Corporation Inc.
The Board Members
The Company’s management, combined with the support of the members of its Board of Directors and Advisory Board, has access to strong innovation capabilities and has established access to high-quality manufacturing through the acquisition of Bioganix®. Management believes that it is well-positioned to capitalize on favorable long-term trends in the nutraceutical market.
1st Business Segment is OTC Health and Wellness and the products are :
2nd Business Segment is Endo-Medical Cannabis :
Relevium’s BGX E-Health Secures US$20M Contract for Supplying PPE to the Canadian Market for Q1 of the Current Fiscal Year
September 17, 2020
MONTREAL, Sept. 17, 2020 (GLOBE NEWSWIRE) — Relevium Technologies Inc. (TSX.V: “RLV”, OTC: “RLLVF” and Frankfurt: “6BX”) (the “Company” or “Relevium”) is pleased to announce that its wholly-owned subsidiary in the US, BGX E-Health LLC ( “BGX”), has secured a USD$20 Million contract to supply critical PPE to the Canadian Health Care Market with deliveries starting the week of September 20th and ending by the first week of October 2020.
Compared to revenues recorded during the fiscal year ended June 30, 2019, this initial contract is expected to increase forecasted yearly revenues for the year ending June 30, 2021, by an estimated 660%, from CAD$4.05M in 2019 to a forecasted CAD$30M for 2021.
INITIAL CONTRACT TO SUPPLY PPE FOR CRITICAL NEEDS IN CANADA
The COVID-19 global pandemic has created significant gaps in the supply of PPE and the Company, in partnership with the H-Source platform, has developed a strategic supply chain that provides effective access to the required products.
BGX E-Health, the Company’s US wellness subsidiary has secured its first contract to supply critical PPE (Personal Protection Equipment) to authorized medical distribution companies located in Canada and aimed to satisfy the urgent needs of healthcare institutions across Canada. The contract requires BGX to supply several hundred million examination gloves as well as other critical supplies between September and early October of this year, with a total value of this initial contract USD $20 million or approximately CAD$26.4 million. The Company will receive full payment in cash on delivery and the full contract value is currently held in escrow for the benefit of BGX.
In addition to the cost of acquisition, sourcing, and logistics, the Company has entered into sales commission agreements with several intermediaries on both, supply and sourcing sides and will pay sales commissions of approximately 10% in cash and 5% in share purchase warrants with a term of 12 months and a strike price of $0.05 subject to successful execution and delivery of the products. The price of warrants was calculated based on closing price plus a 67% premium and the issue is subject to the approval of the TSX Venture exchange.
The Company expects to provide more details after the fulfillment of the full contract.
Aurelio Useche, CEO of Relevium stated “We have been working diligently in response to the ongoing global pandemic, to execute on the combined PPE supply strategy with our joint venture partners H-Source Holdings. This initial contract marks a major milestone for both companies and validates the Joint Venture between the companies as announced on July 13, 2020”.
BGX E-HEALTH AND H-SOURCE EXECUTE ON STRATEGIC SOURCING JV
On July 13, 2020, the Company entered into a joint venture and cooperation agreement with H-Source Holdings to develop a global strategic angle for sourcing and supplying PPE. The Company, in partnership with H-Source, has completed several multi-channel sourcing contracts in North America and southeast Asia, to secure the supply chain strategy for the companies and begin the delivery of the PPE in the next two weeks. The supply chain strategy between H-Source and BGX will also ensure the fulfillment of future contracts to be acquired over the next several months as countries around the world prepare for the second wave of Covid-19.
John Kupice, CEO of H-Source stated, “We are delighted to join forces with BGX and leverage our secure platform to ensure the safe and efficient supply of PPE for the Canadian market. This contract validates the strength of our JV and we look forward to building a combined strategy for further developing the global market for PPE”
Speculation or appropriate reaction by the market? It is very difficult to ignore a common stocks valuation jump from $5,000,000 CAD to $14,000,000 (Zeros left for emphasis)
Where did this extra 9 million in capital come from?
And having factored in the recent news of a potential increase of revenues by 660% the question on everybody’s mind is how probable is it that this business development is going to materialize into actual money.
Since the firm is yet to break even, we will look at its ability to generate cash and invest in productive projects, and its financial health over the last few years as an indication of the current standing of Relevium.
- The business has been able to generate a relatively stable flow of revenues from its business model.
- It sells most of its products on Amazon.com and this allows them to sell at $1 and produce the products for 21cents on the dollar.
- It has in the recent report admitted that being a third party on Amazon means it does not have control over the commission it pays to Amazon(about 10%)
- The company has stated that its working capital deficit has been an issue because of the tightening of the capital markets in general.
- The business is has halted a majority of its strategic partnerships and arrangements due to COVID 19
- The business is unable to raise additional capital as needed sue to the lack of liquidity in the financial markets for small-cap companies.
- But with the current assets employed in the business, it’s been able to generate business efficiently and has maintained a stable asset turnover ratio.
Cash Flow Statment
- The business has not been able to break even as of yet. This is due to how competitive the industry is and the strict regulations by the FDA and the Canadian Health Organization on HEMP and CBD products.
- But if we take a look at the cash from operations it has increased(although it is still in a deficit) and this means that operations in the business are improving and the company should expect to build cash from operations.
- The majority of the cash is used to make strategic acquisitions in new brands
- It does not take too much to maintain the assets of the business they spend relatively in capital expenditures
- The bulk of the cash used is to rapidly pay off any debt in the company. They have fully paid off the majority of their long-term debts using surplus cash.
Seems the market might be on to something here, although this 180% market appraisal should be watched cautiously.