Post by
Idvhmz123 on Mar 02, 2021 5:13pm
DELIC article, very informative
Signs of a Microcap Multi-Bagger (or How to Pick a Winner) Today Im going to dig into the promising news from Delic Corp. (CSE: DELC, OTCQB: DELCF) the worlds first psychedelic corporation. The news signals the start of Delics move toward generating significant revenues in the nascent psychedelics space. But first I want to take a step back and briefly revisit a few very important factors when evaluating an investment thesis. Know what you own and know why you own it. Yes, this is very straightforward but it can sometimes be too easy to get caught up in the hype especially in a hot new sector. It is far better to own a business growing its position in an expanding market than to own one fighting for the scraps of a stagnant or shrinking sector. Speaking of hot new sectors, that is generally a good place to look for best-of-breed investment picks in an expanding market. Leadership is of the utmost importance. I want the leadership of companies I own to be flush with vision, focus and commitment. In the microcap space in particular, an investment is a bet on company leaders and their ability to successfully execute a well planned vision of the future. Why Bet on Delic Corp. Leadership? Why am I willing to make a bet on Delic CEO Matt Stang and the rest of the leadership on board? Here are three quick reasons. Because Matt spent 21 years as an executive and owner of High Times magazine his last title was Chief Revenue Officer. His time there helped him establish one of the biggest business networks in the alternative drug space. These relationships will prove instrumental to Delic initiatives along the lines of acquisitions and brand building. Because Matt and the Delic team understand how to build a brand that appeals to the very demographic that is or will become interested in participating in the psychedelics space. Because Matt and his vision for Delic are believed in, backed and guided by Directors that have had enormous success in what I would call sibling industries. Director Paul Rosen was the President and CEO of Pharmacan Capital Corp. the company that went on to do business as Cronos Group (NASDAQ: CRON, TSX: CRON), a $5.6 billion cannabis behemoth. Director Kraig Fox was the CEO and President of High Times magazine. It marks an additional vote of confidence seeing Matts highly successful former boss back his next business venture by the way. I dont always put a lot of weight on endorsements but they are hard to ignore when coming from successful executives in similar lines of business. Delic Corp. Preparing for Lift-Off Today Delic announced their intention begin acquiring legally operating psychedelic wellness clinics. These acquisitions would distinguish Delic from many other psychedelics-focused, publicly traded companies. In particular, many companies focusing on drug development could be several years out from revenue generation. Delics plan all along has been to get lift-off on revenues as soon as possible and thus be positioned to benefit from the tail winds that will come with drug breakthroughs and regional regulatory shifts. The gist of their revenue lift-off strategy is relatively straightforward and can be summarized as follows. Step 1: Acquire legally operating, positive cash-flow psychedelic wellness clinics. Step 2: Amplify revenues to those (already positive cash-flowing) clinics with their massive and far-reaching marketing arm. Step 3: Use those clinics as an entry-point to offer other novel treatments as regulations change to allow it. While the gist of Delics near term revenue generation strategy is fairly simple, how the team got to be in the position to execute it is not. It took vision, foresight and years of building out the framework to be ready for these opportunities. Again, such vision and foresight are defining attributes of the leadership of young microcap companies that go on to find huge success. I Love It When a Plan Comes Together Is anybody reading this old enough to have grown up watching The A-Team? via GIPHY Delic founders Matt and Jackee Stang have been intricately coordinating the cogs that make up the Delic Corp. machine for years; long before anyone else was even paying attention to the psychedelics space. When we started the company two years ago we were the first psychedelic corporation. It seemed a little crazy then, but now I think the world has caught up with where we started out. Matt Stang CEO of Delic Corp. One essential component of Delics vision that has been years in the making is their marketing arm. Delic owns Reality Sandwich, TheDelic, Delic Radio and the Meet Delic platforms. Monthly traffic to Reality Sandwich a psychedelic culture and information resource grew from 25,000 visitors per month to over 220,000 between November 2019 and November 2020. If you check it out you will see why its the go-to resource for all things psychedelic. Chock full of beautiful art and imagery alongside informational articles, its no surprise that this educational resource engages anyone even mildly interested in ANYTHING psychedelic. Lets just pause for a moment and contemplate the long term value that each of Delics engaged audience members is worth to a psychedelic wellness clinic. Now consider how quickly that audience is growing and do some forward-looking arithmetic. We [already] have this funnel with a bunch of folks who are interested in psychedelic wellness. Matt Stang CEO of Delic Corp. Pro Tip: If you want to be a key player in any industry, go out and build THE Inbound Marketing Platform for that sector. When you bring value to people by way of honest education it is both virtuous and profitable. Thats easier said than done. But thats exactly what Delic has already done and now theyre set to (virtuously) capitalize on the framework theyve spent years building. Vision and commitment are starting to pay off. Like a Snowball Starting to Roll Down a Mountain Typically Delics business strategy would be called a Roll-Up. I like to think of it as a snowball. As we go through some snippets of todays news release I think that interpretation will become more clear. Summary: Delic is acquiring KIC inclusive of their two clinics and their 6 person team. KIC has clinics in Arizona and California and has done $1.5 million in revenue since 2019. Delic will use their media platforms to drive revenues to KIC clinics. Pretty straightforward. Key Point: KIC management has decades of experience and has successfully scaled and exited over two dozen clinics and hospitals. So Delic is executing their plan of acquiring cash flowing businesses but they have also acquired an experienced team with a history of opening and scaling clinics. And they plan to scale their clinic footprint throughout the country. This is how the snowball starts to roll, accumulating clinics, teams to scale and build more clinics and aggregating best practices amongst everything under the Delic umbrella. Key Point: Co-founder of KIC, Sonny Diaz sees the immense value of Delics media arm in patient acquisition and jumped at the opportunity to join forces and bring all aspects of the business under the same umbrella. He sees the opportunity to scale, and soon, as he notes with his 18 month timeline. Other clinics could see this value too. Its important to note that value and synergies grow along with each of Delics acquisitions, making them an ever increasingly attractive partner to join forces with. This is how the snowball starts to grow. Key Point: This is a good deal structure. Delic is paying $2.25 million in shares along with an incentive bonus for KIC to hit revenue and profitability targets. It is also in alignment with common share holders as the deal stipulates an appropriate vesting structure that incentivizes the KIC team to add value to shareholders before they can extract any value in return (should they choose to exercise their right do so.) I will also point out that with each acquisition like this one, Delic acquires IP, best business practices, physical assets and brand power. All of these things add to their leverage in negotiating future deals to acquire even more assets. Snowball effect. The PsycheDELIC Revolution Is Here. Are You Ready? Mental health is a growing problem in the world. Present global conditions are certainly not providing any reprieve. The promise that psychedelics show in treating various mental issues, along with other applications strongly indicate that this genie is not going back into the lamp. If Im going to place a bet on a business in this space its going to be on the company that has help set the stage for the revolution and has informed the public on how to prepare for it. Delic has been in the psychedelics streets for years informing the public with compassion, empathy and authentic education. With their first mover advantage and authentic communication they will be a hard rock to displace in this space. The Snowball Is Still Small At the time of this writing Delic is trading at $0.47 USD and has market cap under $20 million USD. Thats less than 10% of the value of each of the companies below. source: psilocybinalpha.com It is my intention to use this platform to draw attention to small companies before they become big. Those with multi-bagger potential. I look forward to seeing Delic continue to execute their business plan in the psychedelics space. There is plenty of open space below for the snowball to roll. Bill McClain Editor of The Momentum Letter About the author. For more in depth