Usually such set up was followed by a nice run up and then a dilution and crash.
Will it be different this time?
As someone rightly observed about stock market: 'You think you finally found a key to a market - but they have changed the lock'.
There is a PR this morning about this research.
Let me make a prediction: market won't care. Especially considering the fact RIBT paid for that research.
But maybe someone in the industry will pay attention and that will result in additional orders for the products.
You didn't get my point about warrant conversion. They needed cash right away and that was a known fact. So they decided to get $2 mln and leave $0.5 mln on the table and lose another $3 mln when the rest of the warrants are converted.
Market is peer driven mechanism and everyone looks at everyone else. If I see some institution is willing to give a company millions of dollars buy warrants to buy a stock at $2.57 I think that $2.57 is a great deal since big boys are willing to buy the shares at that time. So I buy at $2.6 and everyone else does the same. That price has nothing to do with the potential of the company since stock can go up and down a lot. Look at RESN. Same company, same product (or lack of) but the stock was at $6 and at $20. Just because someone wrote couple of articles.
But back to SCON: when the warrants are repriced to $2, noone is going to buy at $2.6 anymore and the stock plummets to its new perceived floor. Again, that price has nothing to do with anything. Market is not rational with small caps.
I have no idea if they are going to sign a contract soon or not. What I am saying is that in either case they needed money right away and in either case they had limited choices of how to get the money. And all those choices would mean dilution and repricing existing warrants was a prudent choice.
So my point is, this repricing in no way indicates they are not going to sign a contract soon.
What if they are in negotiations and the potential customers was trying to get a favorable terms (long term) offering them some upfront payment. Thinking the company will accept since they are running out of money. Would it be a good deal for the shareholders if the company accepted such an offer and let's say get $5 mln upfront but would lose $50 mln in long run because of the terms of the contract? Would it make sense for a company to instead reprice the warrants and lose $4 mln and buy yourself a year and force the customer to agree to better terms?
I am also all calls. No common shares for now. Usually this is not a good strategy but in this case (high risk/huge reward) - that seem to be a good strategy. Unless they don't sign a contract by July.
Each of those customers can take more wire than SCON can deliver for the next couple of years. Do you really think a customer wants to let its competitor to take all the wire SCON can produce and wait 2 years until SCON can build new capacity?
Whatever the reason for the delay is - it is not the one you suggest.
As for the warrants repricing. I don't view it as an indication of anything. Even if the contract is going to be signed next week - it still take months to start deliveries and the company need to pay its bills tomorrow.
Believe you me, I've been following this company since 2004. But I bought this stock only a year ago since I understand that it takes years to turn the ship.
But keep bashing. I like to see those burned by this company 10 years ago bash it now. They were wrong then, they will be wrong again. And again. Because most of the 'investors' never learn.
You didn't answer my question.
I don't get it. Do you own RIBT stock?
If the answer is yes - that means you think the stock is going to trade higher and that would mean Short did something right and that would make you a hypocrite.
So, do you own RIBT stock?
And why is Short is FOOL, may I ask?
Because it was not him on the TV?
I see. There must be a law that that prohibits investors from buying RIBT stock because a competitor was on TV. Too bad for those who watched the segment since there is no Axium stock to buy out there last time I checked. Too bady they cannot buy shares of another company that also sells rice protein and also projects to double thier revenues in 2015.
So you are right. We are screwed. They beat us to TV and rice bran protein used up its 15 minutes of fame.
"Axiom now produces Oryzatein Brown RiceProtein Powder, which it sells under its own Growing Naturals line. It's also sold in products made by manufacturers like Garden of Life and NutriBiotic.
Janow estimates 2014 sales of $100 million will double this year. One big reason is that the market is moving beyond just customers with nutritional concerns to fitness enthusiasts. "
Good for them.
But it looks like RIBT is making the same moves that Axiom. H@N is no different than Axiom. And it seem there is going plenty of lunches to eat for those two small companies.
Isn't the bran oil a commodity and can be sold at the prevailing prices? Why hedge?
Can anyone explain how the rate affects RIBT? I thought the falling real would benefit the company since it will decrease the cost of processing the bran while they are selling the oil at the market prices. And as they move into high margin (more labor intensive) products - the cheaper real is good for the company. Am I missing something?
If assuming they are running Irgovel at projected rate since sometime in January and completed Dillon upgrades last year and running US operations at a higher rate than before starting sometime in December - this would mean the company is making money right now.
The fact they haven't had a capital raise coupled with them being profitable for at for almost a month - might mean there won't be any more dilutions to stay afloat. Another reason for a dilution could've been to let some big boys in before they start a PR blitz and stock rises. But the PR blitzh might have been started: there was a PR and Seeking Alpha article, and probably more to come.
I said on many occasions it woudn't make any sense to start a PR campain before the company is profitable. No one would care. Another thing is to promote the company when it is making money and there is much less risk in investing in the stock.
You guys who talk about RESN shares are clueless about stock market. The simple truth about stock market is that there are entities that move stocks. It is very easy to move a low float stock. The only problem those entities have - is to acquire a significant number of shares in such a stock.
And they scored with RESN. When STI needed to sell 700000 shares - those who bought the shares started to promote the stock. That simple. If SCON didn't sell those shares - RESN would be trading at $7 right now and there wouldn't be any articles about its brigth future.
So , please, stop this nonsense about RESN. If you made money - good for you. Just don't think you made money because you are smart, you just got lucky that someone with big pockets decided to make money on that particular stock at the time you had it.
Let me guess, you checked it online somewhere? How do you think those sites make money? Simple, they score everyone much higher so majority scores higher that 100. So that every narcissist would visit them again and again.
I am glad I spent that time. I was worrying about them not gettiing enough bran until the 3rd sourse is in place, but now I am pretty much confident they are firing on all cylinders right now and they are now learned their lesson and such situation won't happen again.
RIBT needs a fraction of a percent of the bran available in CA. And I think the mills they are buyingfrom produce much more bran in Nov - July period that RIBT can buy. Only August and September are slow. The solution to this problem is very simple and the management articulated it duging the CC: invest in storage, and be prepared. They can easily buy 2x bran in June/July while the mills produce a lot of it and with the Dillon now having 2x capacity they can build up the reserves to be used in August - October. It is actually a good thing they got cought early in the game when their needs were relatively small and the stock price was depressed and the bran shortage was some 20% of their needs. It would've been much worse if it happened when their revenues are much higher and they suddenly realize the can get only 30% of the bran they need.
They keep talking about how good the demand is. And they hoped to have $44 mln in revenues in q3-q4 if everything was perfect. That is some $24 mln in q4. Which means they can acheive this in q2. Everything is supposed to be perfect now. The q1 should be very good as well with the Dillon upgrade done in November. They should be able to meet all the US demand in q1. It will be interesting to see if all thier new products will bring meaningful revenues.
Now they are talking about up to foot of rain. The december storm caused the reservoirs to go from 23% to 35% (I think the current 40-44% is partly because of the snow melting). I would gues this time with the ground saturated, the reservoirs will be around 60% in 2 weeks. This is around average and the wet season just started. The lack of snow is bad, but if the cold weather moves in later in February - it will take one such storm to dump a lot of snow. Don't forget that last year didn't have much rain at all and this winter they are getting at least 10'.
Ok, spent couple of hours trying to read on the subject.
Found very interesting tiblid:
"In the last several years, Japan has become the most important customer of California rice and Japan takes all of its requirements in the first 6 months of the crop year. With about a third of the rice going to Japan, this means that over two thirds of all the paddy rice in California must be milled and shipped in the first 6 months of the year.... For the first six months of the year, the milling industry will be running at about three quarters capacity, and then for the rest of the year at one third capacity or less."
And went thru the last year rice shipment numbers and they confirm the above. The shipments of milled short/mid grain rice went to almost non-existant starting in August. It started to recover a little last week of August. It is not an exact science, but considering they lost maybe $1 mln worth of US revenues in q3 (which is some 15%) - my quess is only August was bad and September they were getting enough bran.
Q4 numbers look much much better especially Nov-Dec and with the US capacity being 2x - they most likely cought up with the demand. Which means the q4 US numbers will be good.
And as the tiblid above says , the q1 export numbers are huge - they now have all the bran they need.
So the Q1 should be really good and with the Irgovel now running at projected rate - they are cash flow positive right now and actually can show small profit in q1. When the market is going to price this into the stock valuation is anyone's guess. It can happen when they announce q1 numbers in May, or in March when they say they get enough bran and running on full cylinders and making progress with the 3rd source bran and expect it to be in place by August. Or they can announce the progress earlier and up the estimate.
Of course they might screw something up again or if not they might let their friends in at these discount prices. Take your bets.
I am pretty much sure the constraint is the RB availability and not the capacity of the plant. If the plant couldn't go above 9000 tons - then there wont' be any possibility to do more than that.
Also the PR states they completed the repairs and the maintenance shutdown on time. So it is very well possible they did start operating on Jan, 2nd. But the RB supply was gradually increasing during January and finally they started getting enough of it to run at 300 tons per day.
We'll see if the q1 number confirm what they promise. They should do $7 mln in revenues in Feb and March if they run at 300 tons per day. Plus $1 mln for Jan to be conservative. So if they show q1 Irgovel revenues less than $7-8 mln - that whould mean they were misleading us again.
As for the Thursday trading, it is eather someone put a market order or there was a stop sell order. In both cases the MM have ways to drop the price and get those shares. Someone just got an expensive lesson and the chart got screwed up, but that is a non-event.
Gnus, do you think they are getting more bran now in CA than in q3? That is the $64000 question and if they actually can catch up on the orders and Irgovel not being a money black hole - the $4 stock prices seems very low considering US operations becoming profitable later in the year if not already.
Why would they ramp up slow? Don't forget the repair was to the ash house that has very little to do with actual process of bran processing. My guess is the major obsticle was the bran availability. Another question is if they already at the 9000 ton rate and they say the bran availability is improving - then why they project the annual monthly avarage to be the same as it is right now? How difficult it is to get extra 20% of the bran to run the plant at the maximum capacity of 11 tons? Something doesn't jive here. Or maybe they just want to be conservative anticipating possible disruptions from time to time. In any case, if they do 9000 per months - I will be extremely happy.
Yes, the CA bran situation is the key now. The worst - they are still not getting enough bran and #$%$ off their customers. The best - they are catching up on the lost business and the 3rd mill coupled with the new products in q3-q4 and expanded capacity would mean very good 2015.
We will see when they announce q1 if they are honest with us. Even if not counting January, if they are already running at the 9000 ton tate - they should have revenues of at least 7 mln from Irgovel in q1. If that is the case - Irgovel is going to be at least breakeven and that will remove a lot of risk.
And the US operation should provide the reward part. It would be interesting to see the revenues for US operations during q4 to see if the bran non-availability was a short term disruption during q3 due to mills not milling enough rice and abaited in q4. If that is the case and US revenues in q4 were more than $7 mln - the stock should start moving upward.
I was reading that a lot of weathermen think that once the high pressure ridge near CA is broken sometime in February - it will case multiple rains. And with the ground saturated, I would guess that every inch of rain in Redding region will cause the reservoirs to gain 2% at least. Maybe the cold weather will move there as well - then we might see a lot of snow. It is very well possilbe the reservoirs will be near average levels come April.
Wow. I didn't realize there were people out there who relied on the most optimistic estimates the RIBT management provided. One must've bailed out at the open.
I for one would be happy if they actually process 9000 tons per months. As far as I remember the revenues used to by $7 mln from old Irgovel. Now with 50% more output the revenues should be around $10 mln. And if that is the case, the Irgovel will be at least breakeven and that will remove a lot of risk out of the equation.
So unless they are misleading us again and they actually run at the 300 tons per day rate every day and not just for a couple of days until they work thru all the bran - the news is very positive.