As an Accredited Investor, you have seen lots of deals; some work out, and some do not. But you have never seen a deal like this one.
THIS SPECIAL SITUATION OPPORTUNITY IS ATTRACTIVE FOR SEVERAL REASONS:
READ FURTHER TO LEARN HOW YOU CAN PARTICIPATE IN THIS SPECIAL SITUATION OPPORTUNITY WHICH IS POISED FOR HYPER GROWTH BECAUSE:
MANAGEMENT TRACK RECORD:
Management has invested over $500,000 to get the Company to this state of operational readiness.
This is not a start-up investment, and most Accredited Investors have learned not to invest in a "Story" deal, because the better risk adjusted investment is not developmental capital but rather to deploy growth capital into early-stage companies on the verge of accelerating to hyper growth. While those deals are out there, you need to not only find the opportunities but to find the right management team because this is really a "Bet on The Jockey".
In this case, Herbal Botanical Products has a great Jockey and team to bet on. You can read about the management teams background in the Pitch Deck which can be accessed by clicking the link below.
Stephen Michael McKay has made a career out of organizing, operating, growing, and selling companies. He grew one such Company from less than $200,000 a year in revenue to an annual run rate revenue of
$60,000,000 in just five years and sold it to General Electric for over $40,000,000. In the process Access America Telemanagement ("AAT") was recognized as one of the fastest growing companies in the United States by INC 500 Magazine two consecutive years (#6 in 1994 and #96 in 1995, the Company sold to General Electric in 1996) under McKay's leadership as Chief Operating Officer.
Here is the proof:
It takes a special skill set to organize, develop, scale and hyper grow an organization, especially one with operations on a coast-to-coast scale like and McKay and the Herbal Botanical Products management team have demonstrated those skills time-and-time again. It takes another skill set to monetize the corporate development efforts, and this same team have proven their acumen in the exit execution arena as well, so investors are investing in a team that can complete the full investment cycle including raising and deploying the capital and then returning the cash with a return on capital.
After the sale of Access AAT, another example of a McKay lead special situation opportunity was the acquisition and liquidation of select distressed assets from a bankruptcy estate resulting in a total return of $55,000,000. After expenses investors realized a 25X cash-on-cash return in about 3-years.
Here is the proof: https://www.bizjournals.com/stlouis/stories/2005/11/14/story5.html.
If McKay and the team can replicate this type of investment outcome for Herbal Botanical Products Bridge Investors, then equity holders would realize roughly $10.00 per membership unit or about 25X your invested capital. But we think there is more to this opportunity.
Now you have the chance to participate in the latest special situation this team has uncovered, just read further to find out more.
CBD IS THE BEST INVESTMENT OPPORTUNITY THAT HAS COME ALONG IN A WHILE.
Why, because the human body naturally interacts with cannabinoids. Chances are that you did not know that the human body has a neural network known as the Endocannabinoid System ("ECS"). The ECS resides just below the derma and connects to CB1 & 2 receptors throughout the body with CB1 receptors in the brain and CB2 receptors in all major organs.
The ECS is the pathway that induces the enhanced Bioavailability which is necessary for the body to derive the potential health benefits from Cannabinoids.
The one comment we always get is , "but CBD is everywhere", which is true, but that is actually an advantage for Herbal Botanical Products; let me explain:
Not All CBD is the Same – Read the Small Print
While CBD is legal in all 50 states, there are still no "rules of the road" from the FDA which means that not all CBD products are equal or even comparable. For instance, some of the market leaders play games with labeling, where they sell a one-ounce container of CBD pain cream with an advertised concentration of 500mg of CBD. Then they advertise another container of CBD cream with 1000mg of CBD, but this container is a two-ounce serving meaning the customer is not getting product that is twice as effective, they are just getting twice the product, it is volume verses concentration.
The quality and effectiveness of the product is where Herbal Botanical Products, LLC, the ("Company") truly shines, and that keeps our customers coming back for more.
In a recent study of thousands of CBD consumers, when asked "What are the Five Primary Product Attributes you Look for When Buying CBD Products"? The key product attributes are:
Most of the CBD products have low concentrations of active ingredients, over promise and underdeliver efficacy, and have a product catalog that tries to address a broad range of products with no focus on a treatment mission.
At Herbal Botanical Products we only formulate the highest quality products with proven effectiveness by using CBD Isolate, Nanosized CBD and CBG, once again not all CBD products are comparable. Our high level of efficacy is why our customers and Dealers re-order monthly.
WHY OUR STUFF REALLY WORKS!
It is simple really, and a matter of bioscience. In the 1990s scientists discovered that the human body has a neural network residing just below the derma, which was named the Endocannabinoid System. This neural network is connected to CB1 & 2 receptors in the brain (CB1) and all major organs (CB2). When incremental CBD is introduced into the body, it triggers the production of more Cannabinoids to achieve equilibrium, thereby delivering the beneficial health properties and results. In the case of inflammation related pain, the result is a neural message is sent to the brain signaling to cease the pain to the area where the external CBD was applied, and the brain responds with a stoppage of the pain signals.
The key is to increase the BIOAVAIBILITY or the absorption so that there is more incremental external CBD infused into the body, thus increasing the body's natural production which provides more relief and beneficial results. To accomplish this all Herbal Botanical Products, LLC uses CBD Isolate, Nanosized CBD, CBG (Stem cell), and in the case of out topical pain creams we add a proprietary matrix of five Terpenes that assist in reducing inflammation which is the root-cause most muscle and tissue pain.
Developing products that increase BIOAVAILIBILITY and thus the product efficacy is the guiding principle that Herbal Botanical Products, LLC has used to formulate all of its topical pain product set.
The key take-a-way for investors is that once pain patients try our products, they become returning customers which produces a recurring revenue stream, which increases the profitability and expands the enterprise valuation multiple.
HERBAL BOTANICAL PRODUCTS, LLC BUSINESS OPPORTUNITY
The Herbal Botanical Products business opportunity embodies all of the key elements of the last two build and sell special situations that McKay and the team have been involved in. Herbal Botanical Products began exactly the same way as the Lucent special situation, with McKay acquiring select CBD/Cannabis assets from two bankruptcy estates. After that strategic move, the business model was developed, products formulated, operational assets built and distribution plans executed, just like Access America.
The risks related to the current bankruptcies have been abated and operational risks are mitigated as the Company is revenue positive, has substantial raw material and finished goods inventories and revenue is growing. Finally, just like in the Lucent deal, potential returns are compelling.
The age-old adage of individual investors is to "Bet on The Jockey" and that is ever so true in this case.
As a former COO, CEO & Chairman in the competitive and highly technical Telecommunications industry, McKay has the operating experience to lead and develop the Company's operations, the forethought to position the Company for exponential growth and to exploit the coming consolidation within the Cannabis business sector, just like he did in the telecommunications market during its period of hyper-growth in the 70s, 80s, & 90s. In fact, Companies that Michael lead were top rated INC. 500 growth companies.
If you would like to read more about Stephen and the other members of the Herbal Botanical Products management team, please click this link to the Pitch Deck and read the bios for the Team: https://foundersuite.com/pitch_decks/c09234c6-d4ad-464a-960d-d23b94fded83.
While you are reading about the Team, check out Randall Allen. Prior to Stephen and Randy working together for over 20 years, he served in the US Navy Submarine Force as a Nuclear Reactor Operator and Supervisor finishing his career as Chief of the Boat on a Fast Attack Submarine, the senior enlisted advisor reporting directly to the Commanding Officer. In Telecom, Randy was Vice President of Information Technologies with the second Telecom company. That Company had operating authority in 39 states to provide local, long distance and other value-added services, all billed on a single unified bill. The operational challenges in that highly technical and complex environment were a technical "Rubiks Cube", but Randy developed a successful integrated Operational Support System that made the entire process seamless for employees, vendors, and customers.
Compared to the Telecom environment and running a nuclear submarine for the US Navy, the challenges associated with scaling CBD products pale in comparison.
In fact, it takes a lot of hard work and smart decisions, all guided by experience from prior successful transactions to get a special situation from the Alpha to the Omega, from cash in to cash out. There are always surprises and adjustments have to be made, so the right leadership from management is the difference between a 100% loss and a 25X return.
Operationally Herbal Botanical Products, LLC has:
BRAND BUILDING AND MARKETING PLANS
Kevin Harrington – As Seen on TV – The Company has executed a Participation Agreement (“PA”) with Fortune Media Group DBA Kevin Harrington Studios (“KHS”). Kevin was one of the original panel members and investors ("Sharks") on the ABC TV series Shark Tank from its inception in 2009. He left in 2011 after two seasons of the show. The PA provides the Company with a number of marketing and branding services which include the following:
All of the initial elements of the PA have been completed and delivered and we have pricing for all services which can be redeployed at any time.
As part of the Agreement, Herbal Botanical Products received a license in perpetuity to use all creative produced under the PA which will enable the Company to utilize the marketing content in other marketing campaigns including:
SPECIAL SITUATION COMPARATIVE ANALYSIS
This management team has acquired all of the skill sets over the last few decades of execution that are required to successfully execute this business plan. These skill sets include the following:
Over the last 20+ years the Herbal Botanical Products management team have acquired all the necessary skills to successfully execute this business and capital plan.
As a reasonableness check if the outcome for Herbal Botanical Products be equivalent to the Access America deal, equity holders would receive $8.40 per membership unit (assuming not balance sheet adjustments) or 21X the original investment. If the outcome is equivalent to the Lucent deal, then equity holders would receive $11.00 or 27.5X, again assuming no normal accounting adjustments.
THE HERBAL BOTANICAL PRODUCTS INVESTMENT OPPORTUNITY
We are offering an opportunity to Accredited Investors to participate in a round of Bridge Financing in the total amount of $300,000.00, of which $60,000 is already invested by the lead investor. This capital will be used to accelerate the Company's distribution network, expand our Omnichannel Digital Marketing Strategy, and add new products. For this investment, the bridge investors will receive a total of 750,000 membership units of Herbal Botanical Products, LLC at a pre-money valuation of $2.0 million ($.40/membership unit).
The Bridge Financing is being offered with a minimum investment of $10,000 in exchange for 25,000 membership units representing a ½ of 1% fully diluted ownership of the Company for the minimum investment. Accredited Investors can invest additional capital in $10,000 increments each representing an additional ½ of 1% ownership of the fully diluted ownership of Herbal Botanical Products.
THE TIMING FOR THE BRIDGE FINANCING IS PERFECT
As all investors know, timing is everything. Too early is just as bad as too late. This is the perfect time in the developmental cycle of Herbal Botanical Products to make an investment. As we have pointed out the risk profile have been materially improved over the last 18 months as management has improved the operational profile of the Company.
The following illustration of an Investment Risk Analysis shows the difference in the risk return profile hypothetical risk adjusted position that management assumed when the initial seed developmental capital was invested verses the investment of the proposed Bridge Financing growth capital.
There have been numerous quantitative studies that try to determine the point of the business development cycle that offers investors the best reward-to-risk ratio when investing. These studies suggest that the optimal point in the business development cycle to invest capital is the point where the expected reward to risk ratio peaks, or in other words the risk and presumed reward would be in equilibrium.
Since management has invested time and capital to position the Company with positive operating momentum, all of the formative (early) risk has been extracted. There is a small amount of:
➢ Scaling Risk;
➢ Market Risk, and;
➢ Competitive Risk.
All these are forms of risks all investors and management assume when conducting business operations. They are, in the normal course of events, typical, and manageable.
From a Bridge Investors perspective, the risk profile of the Company is significantly lower now than when management put capital at risk, and therefore now is the perfect point in the business cycle to deploy growth capital and participate in future multiple expansion and enterprise valuation increases.
ADDITIONAL CAPITAL FORMATION PLANS
The Company anticipates additional financing of two consecutive Crowdfunding rounds under SEC 506c rules. Management decided to pursue Crowdfunding because:
Unaccredited Investors as not as sensitive to valuation as they are to identifying with the product or service as they relate more as consumers rather than investors.
Because of this the "investment" includes "Perks" which are products. The product portion of the monetary exchange is booked as revenue and the balance as capital contribution.
Therefore, we not only get capital, but the Company acquires customers, and some of those customer become Distributors.
The Crowdfunding capital plan is as much about distribution development as raising operational capital.
The anticipated valuation for those rounds should be substantially higher than the premoney valuation of the Bridge Round and the additional equity dilution has already been accounted for in the fully diluted ownership discussed above.
The benefit for the Bridge Investors is the chance to ride the Crowdfunding wave to higher equity valuations and expanded operations with increased sales and revenue, thereby further increasing the enterprise valuation.
Finally, the Securities and Exchange Commission recently modernized the Crowdfunding rules making the use of this capital medium even more attractive to issuers.
Crowdfunding I – Will begin as soon as the Bridge round is closed. We anticipate going to market for $500,000 at a pre-money valuation of $8,500,000, with a price per membership unit of $1.70 or a 4.25X valuation increase over the Bridge valuation.
Crowdfunding II - Will begin about three months after CFI tranche is closed. We need a small time-gap to accelerate operation and distribution development so as to justify a $15,000,000 per-money valuation, which would result in an offering price of $3.00 per membership unit or a 7.5X increase in equity value over the Bridge financing.
Both of these future rounds have been considered in the fully diluted ownership percentage as shown in the following capitalization table. In short, for every $10,000 invested in the Bridge Round, the Bridge investor owns one-half percent of Herbal Botanical Products on a fully diluted basis.
CAPITALIZATION TABLE - FULLY DILUTED
POTENTIAL EXIT SCENARIOS
Continued Operations with distributions
Look for an upstream merger partner (this was the preferred exit method in Telecom)
Become a consolidator to continue growth and then either merge with an even bigger partner or go public.