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Youngevity International YGYID Stock News

Youngevity International (YGYID) is achieving growth by building upon an omni-direct “consumer cloud” driven by an independent direct selling network. Despite the Herbalife headline saga, companies that engage in direct sale business models are far from losing competitive traction. In fact, a small handful, including Youngevity, are experiencing growth through multiple revenue streams and by a customer focus enabled by state of the art technologies.

What drives the Youngevity story? At the heart of the matter is a commitment to three key things: 1. Providing ways to help people improve their physical and emotional wellbeing, through unique products, including best in class nutritional products grounded in years of research.2. Building a culture of belief, and a community of like-minded distributors who are looking for achievement in their lives. That success that may come in different forms and varying levels of degree, depending on personal goals. 3. Giving back, with a focus on social responsibility that is carried out through the Be the Change Foundation.

Here is a six-minute video that represents both the mission and enthusiasm at YGYID and readers are highly encouraged to take the time to view the video in its entirety.It may change the way you may look at direct sales companies, and will certainly convey why YGYID is unique.

Youngevity Your Path to Betterment from Youngevity International on Vimeo.

What Has Youngevity Already Done?

While there may be a tendency to compare Youngevity to Herbalife (HLF) and their multi-year news making battle, investors should know that the only real similarity is that the two engage in direct sales business models.

The quick answer is that Youngevity has done quite a bit since becoming an OTC-traded company in 2012. YGYID has built out a seasoned leadership team and is experiencing impressive growth as a result of a focused and clear business strategy.

Some of the prioritized initiatives include improving operational efficiencies, developing a core competency in brand acquisition, creating a technology roadmap, and developing effective global e-commerce and social selling platforms (YoungevityBetaUSA.com). As a result, annual revenue increased to $163 million in 2016, a staggering 307% increase from just $40 million in 2011. YGYID is already positioned as a Top 100 Global Direct Selling Company and has recently secured a NASDAQ listing that may open the door to substantial institutional interest.

So, even accounting for the revenue growth, the richly experienced leadership team, and the NASDAQ uplisting, discerning investors may want to know more.

Since 2011, YGYID has consummated sixteen mergers and acquisitions. These complement and help build the Youngevity portfolio and provide diversification for the consumer products division. They further strengthen the commitment to support socially conscious efforts, with the addition of brands like Good Herbs, Beyond Organic, RESTART Your Life, Sta Natural, and Paws Group. And one of the most exciting areas for acquisition has been services. Telecare is a direct access portal to doctors and medical care via telephone consultations, and David Allen Capital offers small lending services that can provide same day loan approval.

The Global Initiative

While YGYID is expected to generate organic revenue growth from these accretive acquisitions, some of the significant opportunities continue to get generated from the company’s scalable and sustainable global expansion efforts. With just 9% of current revenue recorded from sales outside of the United States, the international market represents a relatively untapped venue to support a global growth strategy. Internationally located, YGYID has offices in New Zealand, Mexico, Russia, and Singapore. This global strategy is intended to extend product and service offerings to countries identified as having immediate and long-term goth opportunity, as well as having the ability to serve as a corridor for expansion into neighboring countries.

The company has also secured revenue generating opportunities in the Eastern regions of the world, with offices in Taiwan, Malaysia, Hong Kong, and the Philippines.Global product development and distribution rights have been met with enthusiastic praise from these countries. Future targets will include highly populated countries in Latin America, Southeast Asia, and Eastern Europe. Global expansion will serve as an avenue for explosive growth within the next several years.

The Culture at YGYID

Satisfying customers, the markets, and the communities YGYID serves is a driving force. YGYID is attracting motivated and socially conscious customers, distributors and employees. YGYID intends to continue to adapt to and address rapidly evolving consumer preferences in the marketplace.

As an example, take a look at company owned CLR Roasters (clrroasters.com). Café La Rica, one of its brands, has quickly become the 5th best-selling espresso brand in the United States. The coffee roasting operation is based in Miami, Florida and enjoys the capacity to roast up to ten million pounds of coffee per year in its 50K square foot state-of-the-art facility. Primarily focused on the CLR brands, YGYID also extends its offerings by creating private label package design, marketing opportunities, and brand building for commercial customers. CLR Roasters entered the single serve K-Cup market in 2015 and extended its market presence in national grocery and retail chains throughout the world. CLR Roasters is also served aboard major cruise lines and is the official coffee of the Miami Marlins baseball team – served proudly in its stadium.

Coffee is the connective thread between the business side of the business and the socially conscious side. Being a vertically integrated coffee company, delivering field to cup production, YGYID takes both pride in and advantage of its company-owned coffee plantation and state-of-the-art dry processing facility in Matagalpa, Nicaragua. YGYID plans to purchase a second plantation in the coming months. With CLR Roasters using only sustainable farming methods to foster increased yields, as well as realize cost savings, the brand has become a recognized leader in providing high-quality coffee. In addition to the high quality, the company is also credited for being USDA Organic, Rainforest Alliance Certified, Fair Trade Certified, and Bird Friendly Certified.

Serving as an exemplary model for sustainable and responsible business practices, the CLR Roaster model demonstrates the socially engaged culture at Youngevity. A new generation of consumers are intent on supporting companies like YGYID. Readers are encouraged to view this 3-minute video to learn more.

CLR Plantation | Matagalpa, Nicaragua from Youngevity International on Vimeo.

Youngevity Financials at a Glance

And this is where the YGYID story gets even better. While the company has a great fundamental story, the financial details are just as provocative. The growth at YGYID cannot be understated, with the company experiencing steady revenue growth since 2011. Although the expenses related to an aggressive merger and acquisition strategy may trickle to the bottom line of the financials in the short term, what remains certain is that YGYID is an EBITDA positive company, and has been since FY2013. From the company’s most recent FY2016 filing, gross revenue exceeded $162 million and produced EBITDA income of $6.77 million.

The balance sheet shows cash on hand and receivables of approximately $3.8 million at the end of FY2016 and $66 million in total assets. Stockholders equity stood at $18.98 million, up 62% from its FY2013 level of $11.7 million.

YGYID has traded within a tight, and arguably undervalued level during the past 52-weeks, with an adjusted high of $6.40, and a low price of $4.60 per share. Average volume is roughly 80,000 shares traded per day, and the company currently has 19.65 million shares outstanding after a 1:20 reverse split. Importantly, insiders own 77% of the company stock, so investors who may become spooked by the split should take comfort in knowing that management has a similar incentive in creating shareholder value for both themselves and company shareholders. Keep this in mind as well. With YGYID performing admirably on multiple levels, the promise for institutional and investor interest is magnified once the NASDAQ listing is maintained. With a small float of roughly 4.5 million shares, new acquisition and revenue news may be met with strong upside bias in the trading of shares, as liquidity and demand for shares may have a positive impact on stock price movement.

The Youngevity Difference

For investors getting their first look into YGYID, there is a tide of promising data that should enthuse even the most conservative of investors. Youngevity is a company that has an extraordinarily strong leadership team that in less than five years has driven revenue and brand equity significantly higher. Looking ahead, investors should expect more of the same.

YGYID has proven their ability to drive organic growth, implementing a global expansion plan that is likely to generate explosive revenue opportunity. Their merger and acquisition strategy is on-going and has created accretive cash flow for the company, allowing leadership to intensify its product expansion to both diversify the scope of the business and attract a larger base of both consumers and distributors.

In addition to building their offering through acquisitions, the YGYID internal product development engine is strong. Examples include a roadmap of compelling nutritional supplements with superior formulations, as well as technology-driven products like SNAP2FINISH- a stunning web application that offers photo gifts (beta.snap2finish.com).

Already offering over 5,000 high-quality consumer goods through an updated and user-friendly web portal, YGYID has developed a business platform designed to provide seamless and efficient development of global commerce. In essence, the company acts as a “parent brand” to a diverse product base, inclusive of food and beverage, wellness, apparel and jewelry, spa and beauty, and nutrition and wellness options, with each category being demand driven throughout the world. Capitalizing on a demand-driven business model, YGYID has turned a substantial 89% of its revenue through direct sales and has also built an impressive market in its commercial coffee segment, which has driven 11% of the company’s total revenues.

Youngevity is fostering a development strategy that is expected to pay long-term reward for investors. Growth in a global market, taking advantage of technological advances to seamlessly develop new markets, and the vision to build a diversified and worldwide brand through socially conscious means is a testament to the forethought that the management team has put into the strategic initiatives. The world has seen a paradigm shift in the way business gets conducted, and the prolific use of social media can either become a key ally or foe for an emerging company. For YGYID, the story is positive, compelling and timely.

Even if investors were to leave the 307% growth in revenue on the side for just a moment, the numerous intrinsic factors in play at YGYID could surely make up for the difference. In reality, though, the surging revenue growth is important and combined with the value-driven business model in place at YGYID, the decision to invest into YGYID stock should not be a difficult choice to make.

Disclaimer- CNA Finance is NOT an Investment Advisor. Our goal is to bring both news and under discovered stocks to the attention of investors to assist in making smart decisions in the market. CNA Finance is a for profit company. That profit is generated through three (3) different types of relationships. First and foremost, we work with pay per click and CPM advertisers on banners. We also have affiliate relationships with various companies where we earn a portion of the sales we refer. Finally, we may have relationships with some of the companies or IR firms that represent companies mentioned within our works in which we are compensated in cash and or stock for consulting, investor relations, and Press Release services. Youngevity International paid CNA Finance $3,000 to hire Perceptive Analytics for research and writing services as well as other investor relations services provided to Youngevity International by CNA Finance. All information researched and provided through any article associated with Youngevity International and published on CNA Finance is public information that is documented and available upon request. CNA Finance encourages all investors to seek professional advice before making any investment decision.

Here is a bit of big news for DarioHealth investors – the company is getting labeled as a “disruptor” in the multi-billion dollar diabetes monitoring market. Now, in most instances, being stigmatized by a label is not necessarily a good thing, as most of the adjectives that come to them are typically not favorable. In the case of DarioHealth, however, being classified as potentially “disruptive” is just about the best compliment the company could earn, signaling a recognition of their progress towards becoming an industry leader in next-generation, app-based digital health data management.

DarioHealth is rapidly transforming the digital health landscape by providing personalized solutions that are redefining the way people think about chronic disease management. People deserve the best tools to manage their treatment, and with DarioHealth intuitive user-centric and highly engaging approach, individuals have an unrivaled method for health management.

DarioHealth just started commercialization in the U.S. a little over a year ago, and is already thinking ahead of next-generation. DRIO sees a future in monitoring and data management in big data, analytics and artificial intelligence and is less focused on the device or how you take the blood sample, but rather the next-generation’s ability to predict future blood sugar glucose levels.

When DRIO began marketing its MyDario device in the U.S. in 2016, few analysts were giving credit to the breakthrough technology the company was bringing to the market. Granted, emerging companies like DRIO often don’t get the market attention deserved, but that lack of early recognition is in no way an indicator that the company’s product is not worthy of considerable attention. DRIO is worthy of every bit of attention its competitors are getting, and here’s why.

The DarioHealth Model

As strong as the story is becoming with DRIO executing well on their mission to become a leading “app based” blood and glucose monitoring system for people with diabetes, the company is uniquely positioned in digital eHealth big data management and analytics. The business model is not necessarily complicated in design, but when applied successfully, it can be quite lucrative. If you look, the signs of success are already apparent, with DRIO announcing a record first quarter in May of 2017, highlighted by quarterly revenue increases of 77% compared to the first quarter of 2016, and a 20% sequential increase over the most previous quarter. Indeed, these numbers demonstrate the financial direction of the company, and by digging deeper into the recurring-revenue model, investors can get a glimpse as to how DRIO expects to consistently increase its quarterly revenues.

It’s been just over a year since their U.S. launch, but DRIO is already accomplishing what it has set out to do – penetrate the U.S diabetes market by selling app-based blood and glucose monitoring devices that allow diabetes patients to quickly monitor blood sugar levels, by using their smartphone; in essence turning an iPhone into a medical device. Since launching in the U.S., Dario has sold more than 25,000 MyDario devices, but the real money-maker comes with the sale of peripheral products needed to provide results. Focusing on opportunity, DarioHealth management seized a chance to take an essential element of a recurring revenue strategy and apply it to their own. For DRIO, the result is that the company has set in place a recurring revenue model by selling diabetic test strips to its device users. Thus, the more devices sold, the higher the level of recurring revenue, with DRIO capitalizing on an 80% rate of customer return for supporting products, and a 75% gross margin on the test strips needed for the MyDario measuring device.

Analysts in the industry have referred to the DRIO business model as the “razor blade” strategy, whereby blade manufacturers sell a single shaving tool and then rely on customer loyalty and a particular blade design to encourage long-term repeat business. It’s a proven and profitable sales model. In fact, for evidence of the value, just look at the $1 billion paid to Dollar Shave Club by Unilever (UN) to illustrate the interest, paying a respectable 6.5X the revenue of DSC at the time. Was DSC disruptive? You bet it was, and the founders earned a handsome reward for being so. Therefore, what’s not to say that DRIO investors won’t enjoy the same fate?

As a believer in app-based therapy and acknowledging the disruptive power behind the DRIO device, there is already clear value. However, the value is amplified by the fundamental changes in the way health services are being provided, creating a perfect storm of opportunity for companies, like DRIO, that are at the forefront of the revolution of digital eHealth big data management and analytics.

Revenue Ramp Thru Q1 2017:

The Perfect Storm For DarioHealth

The biotech market has been fickle and somewhat precarious for small-cap stocks, demonstrated by the current share price of DRIO, which sits at $2.32 a share, down about 45% from its 52-week high. But, underneath the facade of an underpriced stock lies enormous value that is not realized into the current market cap. And, since understanding where the value may lay is not always a numbers game, an explanation as to why the DRIO share price remains undervalued is appropriate.

There is a fundamental shift taking place in the medical world, and those who are paying attention are witnessing a revolution in business analytics and marketing metrics that will forever change the way the medical industry markets and sells drugs. Some have called the trend a violent convergence of technology, innovation, and cloud-based app services, and it’s this alteration of dynamics that is expected to transform parts of the medical industry. And, for companies like DRIO, who are ahead of this shifting curve, the benefits can be substantial. Consequently, for others who are stuck in the 20th century, like an executive at Merck (MRK), who believes that app-based technology will never adopt significant user attention, the likelihood of some large pharmas becoming another IBM of the 1990’s is not out of the question.

There is no need to beat up on Merck, but it’s difficult to reconcile their belief that the growth in app-based therapy does not have a bright future. Several things are happening to prove Merck wrong, and many analysts go as far as saying that the current method of marketing drugs and therapies will soon be obsolete. There is a new world of creative marketing being introduced to patients by social media campaigns and endorsements, that will soon offer more patient value and information that any multi-million dollar ad campaign would ever be able to accomplish. And, those that don’t believe in the change will likely be left behind, no matter the current financial might of the business.

With a plethora of information now at the fingertips of users, consumers and patients alike want to know far more than what a company sponsored marketer is telling them. Thus, with the explosive growth of social media sites that offer reviews, information, and pricing comparisons, drug companies are seeing far less traction to their marketing sites. Instead of resisting the change, companies like DRIO are embracing this trend, with real-time data becoming the new creative force in marketing. Thus, by understanding that data is becoming the driver in providing the consumer a reliable and more comprehensive source of information, companies that follow the change will benefit the greatest.

The DRIO Advantage

Putting the strategic pieces together, and taking into account the fundamental changes in the medical landscape, DRIO sits well positioned to benefit significantly from its encompassing business model. Being a company focused on app-based solutions, DarioHealth brings with them significant marketing advantages. First, DRIO is an agile company, able to quickly produce and target market segments to generate sales. While this model may sound simple, it isn’t. Few medically focused companies to date have demonstrated that they have the visibility to see where the new patient dynamics are leading. The fact that DRIO has a game-changing medical device, coupled with the ability to quickly adapt to changing market conditions, should pay huge dividends in the future.

Already a proven innovator in app-based monitoring and data management, DRIO has developed its MyDario monitoring system centered around one of the most vital assets that people now own: their smart phone. The genius behind the MyDario product is that the system allows the phone to become more than just a communication tool – the phone itself is transformed into an actual blood and glucose monitoring device. Imagine taking a phone and converting it into an actual medical device, whereby a simple plug-in makes an accurate glucose reading within six seconds of treatment, and that reading can be stored in the “cloud”, where it may be retained and shared with medical professionals. No need to imagine any longer, because the MyDario does just that. For those familiar with the device, they know that it has been referred to as the “Fitbit of diabetes,” taking real-time data and running it through complex proprietary and customized software, allowing patients to better understand how food and activity can alter their daily glucose levels in real time. In essence, MyDario offers a predictive capability to patients and can provide insight as to how the body will react to certain foods or situations. The predictive capabilities add significantly to the value of the MyDario device, and serve to differentiate the system from most others available in the market.

The system is next-generation, and DRIO has signed some major talent to spread the message. Securing major endorsements from basketball legend Dominique Wilkins and Lazier Racing, the MyDario monitoring system is gaining market attention. The focus of the partnerships is to advance awareness of MyDario, drive growth of new customers and increase market penetration. In regards to Dominique Wilkins, the multi-year agreement encompasses collaboration on social media, digital marketing and public appearances. Dominique Wilkins stated, “A few months ago, I started using MyDario on a daily basis to monitor my blood glucose levels. I found the MyDario plug-in enabling my smartphone to become a glucose meter device to be extremely easy to set up and use. I really like the compact design and convenience of making what I already carry with me all day, my smartphone, into a medical device. The MyDario mobile app is strong in its ability to manage and analyze the data inputs, leading to the management of a healthier lifestyle. I am excited to partner with DarioHealth to help others be more proactive and to think differently about managing their diabetes.”

Even a former Bayer executive, who worked in the diabetes sector, has joined DarioHealth as an advisor and sees it as a useful tool in maintaining healthy glucose levels, and could effortlessly improve the quality of daily life in patients with diabetes.

DRIO is already thinking ahead of next-generation, and is not as focused on the device or how you take the blood sample, but rather the opportunity in big data management and analytics. DRIO next-generation will be about artificial intelligence and the ability to predict future blood sugar glucose levels.

The Changing Landscape

For larger companies, coming to grips with the changes in the medical landscape are becoming increasingly important, and may be beneficial to companies like DRIO. Perhaps that’s why GlaxoSmithKline (GSK) entered into a partnership with Propeller Health to share in the rewards of the app-based asthma market. Perhaps more important, Medicare is beginning to recognize app-based medical solutions as a reimbursable treatment, opening the DRIO focused diabetes market to tremendous growth opportunity. Welldoc has pitched in as well, having the only FDA approved app-based treatment available by prescription only.

Thus, with two major avenues for revenue now open, DRIO is in prime position to exploit the opportunity. In a medical industry that is plagued by high cost and inconsistent reimbursement rates, companies like DRIO can take advantage of their low-cost options. While emerging companies may feel push back from the high-powered drug developers, the inevitable reality shows that using DRIO products and services can result in a 50% decrease in cost, and may soon have Medicare and major insurance carriers looking carefully at these app-based solutions. And, once the reimbursements become mainstream, investors should expect the valuations of companies like DRIO to increase exponentially, leading to an elevated level of mergers and acquisitions of these emerging and disruptive competitors.

There will come a time when patients will look back and laugh at the idea of having to take up to ten pills a day. But, such a pattern of treatment by pill has become facilitated by enormously wealthy companies, which generally treats symptoms rather than the disease. Well, DRIO can do the same at half the cost. Digital therapeutics and digital drugs will be common forms of treatment in the coming years, and regardless of the money spent to slow the changing tide of treatment options, patients will use their new found leverage in deciding what is best for themselves.

The future of utilizing digital monitoring and therapy is far closer than many people believe, with companies like DexCom (DXCM), which provides continuous glucose monitoring systems, now sporting a market cap of more than $5 billion. And then there is Livongo Health, a privately held company that is making real strides with its app-based “best practices” approach, designed to coach patients in making better lifestyle choices when living with diabetes. Livongo Health raised $52.5 million to advance their cause for “smart” diabetes management. Those two company valuations make the $2.32 share price for DRIO almost laughable, leading many investors to agree with the assumption that DRIO remains significantly undervalued.

Is DRIO undervalued? I believe they are. And I believe that an investment into DRIO is even more appealing to investors when I see industry giants like Apple (AAPL) and Google (GOOGL) hiding behind the scenes developing their own sensors to monitor blood glucose levels. According to a CNBC story, Apple believes that they will deliver the “holy grail” for treating diabetes to the market, an app-based service for its iOS system. For their part, Google and Sanofi (SNY) have partnered in a $500 million joint venture that will focus on type 2 diabetes, developing solutions that could help diabetic patients make better decisions about day-to-day health, ranging from medication management to improved social habits and lifestyle goals.

Obviously, both Apple and Google have the potential to develop apps that can compete with DRIO, but truth be told, the interest by each serves as an endorsement to the medical revolution taking place. It’s typical for large companies to take interest in a sector ripe for change and emerging growth, but they usually do not enter it successfully. Preferably, investors might embrace a partnership between DRIO and either of the two financial behemoths, but the interest alone may become a driving force in building shareholder value at DRIO. For DRIO fans, the dam has been opened, releasing substantial opportunity for the company to exploit, especially in Medicare reimbursement and potential FDA approvals. In either scenario, DRIO is positioned to benefit enormously.

The Means To Disrupt

The good news for DRIO investors is far from complete. From a financial perspective, the company is financially sound with a strong balance sheet. Recently completing a $2.5 million deal with an Israeli digital-health specialized fund, OurCrowd Qure, DRIO sits comfortably with $7 million in cash, absolutely no debt, and only 9 million shares outstanding.

The most recent quarterly results posted record revenues and continued sequential growth, with 76% of its revenues coming from the sale of test strips, proving the value of the recurring revenue model strategy. Sequentially, test strip sales increased by over 20%, and the Dario Blood Glucose Monitoring System sales grew by 6,900 units, eclipsing the 25,000 level since 2016.

For those tracking revenue growth, more good news: DRIO has recorded sequential revenue growth since the 1Q of 2015, rising from $67K to $1.07 million during the latest quarter, representing a cumulative growth of over 1393% in just over two years time. During the last nine quarters, DRIO has posted sequential revenue increases for each quarterly period, with average revenue increases between 12% – 85%.

It’s easy to see what drives the DRIO story, and there is not a chapter that does not inspire interest. The company, with their next-generation MyDario device, is well positioned to capitalize on their industry strengths and have a balance sheet and capital structure that can deliver continued sequential growth with minimal dilutive effect on shareholders. For investors who are willing to conceptualize the future and bank less on what large pharma is trying to tell a changing industry, the opportunities are substantial.

During the past five years, a revolution in the way medical treatment is being delivered has taken hold of a generation of patients that care more about changing a lifestyle than they do about filling their bodies with medication. While medication may be a vital component to patient care, in more cases than not, education and app-based lifestyle management are proving to be a viable competitor to conventional treatment. For DRIO investors, the company is still providing a ground-floor opportunity, trading at prices that neglect to factor in the multiples given to peer competitors. The revenue run-rate alone is ample ammunition to suggest far higher levels for the stock.

At just $2.32 a share, DRIO stock is a prime example of a disruptive stock that has simply not gotten the attention it deserves. Perhaps it’s time to monitor DRIO itself and take strong interest in investing in a stock that is riding the wave of a medical revolution in digital eHealth big data management and analytics.

Disclaimer- CNA Finance is NOT an Investment Advisor. Our goal is to bring both news and under discovered stocks to the attention of investors to assist in making smart decisions in the market. CNA Finance is a for profit company. That profit is generated through three (3) different types of relationships. First and foremost, we work with pay per click and CPM advertisers on banners. We also have affiliate relationships with various companies where we earn a portion of the sales we refer. Finally, we may have relationships with some of the companies or IR firms that represent companies mentioned within our works in which we are compensated in cash and or stock for consulting, investor relations, and Press Release services. Hayden IR paid CNA Finance $3,000 to hire Perceptive Analytics for research and writing services as well as other investor relations services provided to DarioHealth by CNA Finance. All information researched and provided through any article associated with DarioHealth and published on CNA Finance is public information that is documented and available upon request. CNA Finance encourages all investors to seek professional advice before making any investment decision.

Seanergy Maritime Holdings Corp. SHIP Stock News

With dry bulk shipping rates finally ascending from multi-year lows, it may be time for investors to consider allocating a portion of their risk-based assets toward companies positioned to emerge as intermediate and long-term winners in the sector. With that in mind, Seanergy Maritime Holdings (SHIP) is a compelling stock that should be on the short list of consideration for investors looking to take advantage of undervalued companies in the dry bulk industry.

Seanergy is not a new name to the sector. However, the company has transformed itself significantly since 2015, having built an impressive fleet primed to reap the rewards of the rising trend in dry bulk day rates. SHIP already owns a fleet of eleven vessels, comprised of nine Capesize vessels, which are the largest of the dry bulk carriers, and two Supramax vessels. Combined, SHIP’s vessels can haul more than 1.7 million DWT of dry bulk, and the fleet has an average age of 8 years.

What drives the Seanergy story? First of all, looking ahead over the next five years, sector fundamentals are positive. Then, several factors are aligned to support the thesis that Seanergy is a strong value play and growth story in the dry bulk Capesize sector, well positioned to capture significant upside potential. A modern, high-quality fleet acquired at low prices, a strong management team with a committed company sponsor, a competitive cost structure, a respectable balance sheet and solid corporate governance with no related party transactions are among Seanergy’s competitive advantages. And we believe that shares of SHIP at current levels are not factoring in the recent developments at the company or the positive sector outlook.

Seanergy Investors, Stay Focused On Growth

Looking at the fundamentals for SHIP, it’s apparent that the market may have left one of its most emerging dry bulk gems at the harbor. Trading at just 68 cents a share, well off of its 52-week high of $8.65, investors may have written this story off far too early, ignoring the newest chapters being written by company management.

Now, before you slam me with comments about a delisting notice received from NASDAQ, consider the fact that SHIP has a minimum of 180 days to regain listing compliance, along with additional tools at their disposal to satisfy the issue. So, before investors start screaming “reverse split,” the reality is that SHIP has built an impressive asset base, positioned not only to take advantage of a rise in service demand but has also improved its balance sheet considerably to allow the company to benefit materially from increased day rates and lower operating costs. Thus, with time on their side, investors should keep their eye on the opportunity and focus less on the dark clouds that have not even approached the horizon. In the last 52 weeks, SHIP’s shares have traded between a high of $8.65 and a low of $0.60, so given the company’s quality and prospects, the shares could rebound well above the $1 mark.

Positive Sector Fundamentals

After a couple of years in the doldrums, the dry bulk sector has come lately into renewed attention as the result of continued robust demand and diminishing fleet growth. This has restored the balance between supply and demand which is what drives freight rates. Trade growth is expected to be around 2% in 2017 and 4% in 2018, against projected fleet growth of 2% in 2017 and 1.5% in 2018.

Supramax vessels are smaller (60,000dwt), transport a variety of cargoes and can access smaller ports as well. Capesize vessels are the largest ships (about 170,000 dwt) and are used to transport mainly iron ore and coal, which together account for over 50% of the dry bulk trade. China has been the locomotive of the dry bulk trade with India playing now a bigger role, as its economy grows.

Historically, a recovery in the dry bulk sector has a bigger effect on the Capesize sector. Two more factors add to the attractiveness of the sector, which is the core focus of SHIP. Demand for major commodities is expected to continue strong between the years of 2017-2020 and the fact that ships need to transport over longer distances (a lot of high-quality iron ore goes to Brazil to China) translates into higher demand for ships. And there may be fewer Capesize vessels around, as the Capesize orderbook is virtually zero now and is expected to start to decline towards the end of 2017. This can be a bonanza for freight rates and asset values, which are now starting to recover from historically low levels.

So, How Will Seanergy Cruise Higher?

A big portion of the ultimate return in shipping has to do with the timing of the asset acquisitions and the price paid for it. Seanergy has been literally and completely rebuilt since 2015 and has invested $275 million since then, with $41.5 coming from the company’s sponsor. SHIP has managed to acquire the majority of its fleet close to historic low prices, thus having a huge advantage over other companies that have legacy issues with more expensive acquisitions. To give you an idea, the 20-year average value for a 5-year old Capesize vessel is $48 million, and the 5-year average (with the market in a trough) was $34.4. Seanergy’s acquisition cost was $29.2 million for a similar vessel. The average fleet age for SHIP’s vessels is eight years with an expectancy to comfortably generate transport services for at least two decades. So, there is plenty of economic life ahead.

Another factor is Seanergy’s competitive cost structure. SHIP operates as one of the lowest cost providers in the industry, with its daily operating costs about 30% below the industry average. Moore Stephens, an industry specialist firm, reports that the average daily operating cost is around $7,200 when SHIP’s cost is around $5,000. This cost advantage goes directly to the bottom line.

While low budget operators can snag a contract at random times, SHIP has built strong relationships with industry leading charterers, including RioTinto, Cargill, Daewoo, and BHP Billiton. In addition to these world shipping charters, SHIP has secured trade relationships with LDC, Oldendorff, Vale, and Fortescue to add diversity, flexibility, and competitiveness to transport contracts. As world economy gains traction, which economists expect to happen during the remainder of the year, these existing SHIP customers will be the first to benefit from the growth, and the value generated may create a secondary boon for shippers, like Seanergy, who have long-term relationships with global suppliers.

Cost Efficient, Scalable, Growth Oriented Operating Model

SHIP offices in both Athens and Hong Kong and employs a shore-based staff at each port. Seanergy has delegated the outside technical and commercial fleet management to unaffiliated third parties, which enables the company to grow without the need for additional investment in these areas. The company has hired Fidelity Marine, an unrelated third party, to undertake an exclusive role for the commercial management of the fleet on a commission basis. Fidelity Marine acts as the sole broker to Seanergy and brings with them over 28 years of industry experience and longstanding relationships with worldwide charterers.

The technical management gets overseen by V. Ships, a Cyprus company established in 1991 that provides professional management to over 1000 sailing vessels. V. Cyprus enjoys established recognition from the U.S. Coast Guard and other governmental agencies and holds service certification for a variety of ship type. SHIP pays a fee of $8000 per vessel, per month.

Seanergy: The Difference Is In The Management

Forecasts suggest that the upcoming weeks and months may generate additional pricing momentum for dry bulk shippers. But, investors are cautioned not to search out the lowest priced stock in their belief that all carriers will benefit equally. Despite the price, investors must look closely at company fundamentals, its off-balance-sheet agreements, and related-party transactions that exist in the industry.

In sharp contrast to some of its peers in the sector, SHIP has absolutely no off-balance sheet or related-party transactions on the books. The company has also established extensive internal controls and oversight managed by a BOD that has three of its five members sitting as independent directors. The transparency of the third-party ship management is accompanied by the company’s clarity when it comes to its finances.

Management has proved its competence – the company has been completely rebuilt since 2015 and at acquisition prices below historical levels and below most of its peers. In 2015, SHIP went from zero to eight vessels; in 2016 they added another two, and an additional vessel was acquired in 2017 which is expected to be delivered in the near future.

To build the fleet, SHIP completed a $25.5 million raise through two direct equity and one marketed public offering during the second half of 2016. Also, SHIP raised an additional $37.9 million during the fourth quarter of 2016, taking delivery of two Korean built Capesize vessels at historically low costs. These capital raises strengthened the company balance sheet and its ability to secure new financing facilities to fuel growth throughout 2017.

Other than utilizing its NASDAQ listing to raise capital when the markets offer fair terms, the company has established beneficial financing arrangements with Alpha Bank, UniCredit, Nordbank, and Nataxis, just to name a few. Through these partnerships, SHIP has secured seven bilateral loan agreements, bringing total debt to $214 million. Importantly, SHIP has negotiated significant covenants with lenders that provide for minimum payments throughout 2017, as well as maintaining the ability to declare a dividend to holders of common stock. Along with these strong relationships and lender confidence, SHIP also enjoys full waivers on loan facilities until the second quarter of 2018. These arrangements provide Seanergy with firepower and flexibility to pursue additional acquisitions.

The most recent filings show outstanding shares sitting at approximately 37 million, with 19.6 million in the public float. At current stock prices, SHIP has a market cap of roughly $25 million and a total capitalization of approximately $245 million.

Besides competent management and Board of Directors, Seanergy has a committed sponsor who owns about 70% of the company.

Looking ahead, management has a very clear and well-defined strategy – it is looking for additional opportunities in the Capesize sector which are its core focus. And management is positioning its fleet to take advantage of a market recovery. For example, in April, the company announced the charter contract of M/V Lordship for up to twenty-two months, which is expected to generate upwards of $10 million in net revenues for the company. The contract terms also allow for additional market upside and the flexibility to enter into a fixed-price agreement for up to twelve months at any time during the contract. The flexibility of the arrangement signifies the early signs of the rebounding rates, where the shipper is grabbing more leverage as demand increases.

Where Seanergy Will Dock

While investors would be hard pressed to commit to a given price target for a stock, most believe that SHIP is considerably undervalued at current levels. Perhaps being priced in with weaker competitors, SHIP may surprise investors and become the breakout star in the remainder of 2017.

Shares of SHIP at current levels are not factoring in the recent developments at the company or the positive sector outlook. With management tasked on getting the share price to well above the one dollar level, investors should expect an aggressive, but balanced, acquisition and chartering campaign to generate meaningful revenue increases during the next several months.

With its ownership in just the nine Capesize vessels, assuming no additional acquisitions during the remainder of 2017, SHIP can generate more than a 21% return on investment for each ship. Considering day rates of between $15,000 – $25,000 per day, SHIP could deliver an annual FCF of more than $4.2 million per ship based on developing day rate projections.

Why Seanergy may find its stock either ignored or misunderstood by investors remains the question of the day. But, what should be recognized is the inherent value already in place at the company regarding its asset base and potential to deliver significant FCF in the coming quarters. Investors should not ignore the business fundamentals and continued strength on display at SHIP. Additionally, investors would be wise to take the current NASDAQ notice as a short-term blip on the screen, with a dedicated management team having tools available to remedy the concern.

At current levels, SHIP should clearly be benefiting from the recent rebound in industry stock prices, but, for the time being, SHIP remains an undervalued opportunity. As with the new market dynamics, by the time retail investors decide it’s time to make the investment into SHIP, the stock will have appreciated significantly higher than current levels, jumping in reaction to pre or after market news that dilutes the buying opportunity at these levels. For that reason, and for the compelling fundamentals of the company, a ticket to cruise on SHIP is attractive at these levels.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

While I seek to uncover emerging companies that I feel have true value and potential, it’s important that investors assign an appropriate time horizon to each of their investments, understanding that emerging companies need time to mature.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I have no position in any stock mentioned, but may initiate a long position in SHIP within the next 72 hours.

Disclaimer- CNA Finance is NOT an Investment Advisor. Our goal is to bring both news and under discovered stocks to the attention of investors to assist in making smart decisions in the market. CNA Finance is a for profit company. That profit is generated through three (3) different types of relationships. First and foremost, we work with pay per click and CPM advertisers on banners. We also have affiliate relationships with various companies where we earn a portion of the sales we refer. Finally, we may have relationships with some of the companies or IR firms that represent companies mentioned within our works in which we are compensated in cash and or stock for consulting, investor relations, and Press Release services. World Wide Holdings paid CNA Finance $3,000 to hire Perceptive Analytics for research and writing services as well as other investor relations services provided to Seanergy Maritime Holdings by CNA Finance. All information researched and provided through any article associated with Seanergy Maritime Holdings and published on CNA Finance is public information that is documented and available upon request. CNA Finance encourages all investors to seek professional advice before making any investment decision.

Alliance MMA Inc AMMA Stock News

Alliance MMA Inc (NASDAQ: AMMA)

Finally, for those investors that have been patiently waiting to grab an investment into the multi-billion dollar mixed martial arts (MMA) market, the opportunity is now. Alliance MMA, in Q4 of 2016, has become the first and only MMA company that is publicly listed and actively traded on the NASDAQ marketplace. Despite the acquisitive momentum generated during the previous six months, current share prices hardly reflect the intrinsic value already created by AMMA management. Thus, for fans and investors alike, to borrow the phrase, “iiit’s tiiime” to introduce investors to a ground floor investment opportunity into a rapidly emerging MMA stock, Alliance MMA (AMMA).

The AMMA story and business plan are strong, and the acquisition and roll-up strategy implemented since October of 2016 is beginning to deliver the intended results: a basis for a recurring revenue stream that provides both visibility and significant growth potential. And, because the market has apparently ignored the recent spree of acquisitions, shares may represent a bargain at current levels, a statement based on the unreflected value of the ten revenue producing fight promotion companies recently purchased or in LOI agreements by Alliance, each expected to generate revenue in 2017. But, to be clear, revenue generation won’t end with this initial tranche of acquisitions; Alliance has intentions to acquire quite a few more revenue generating companies before the end of 2017. So, stick with me.

In AMMA’s current form, mixed martial arts fight promotion will provide the biggest bang in revenues for the company, but the AMMA strategy goes well beyond one-dimensional reliance on fight promotions as their only source of income. Already, Alliance MMA is quickly taking advantage of its post-IPO status, creating what many believe will lead to the company becoming a lucrative value proposition within the broad scope of MMA production. Through their aggressive and strategic “roll-up” strategy, AMMA is rapidly embarking on its multifaceted business plan, designed to build a substantial multi-regional footprint. Focused not only on fight promotion, but AMMA is also intent on recruiting a dedicated and formidable emerging fighter talent pool, as well as continuing to rapidly and efficiently build its media and services production capability.

First and foremost, let me make one thing clear: Few companies, AMMA included, are looking to go head on against the major league promoters. Instead, smart companies like AMMA are putting themselves into the role of being an active and complementary niche player, with a goal to recruit and develop competitive fight talent that may one day be promoted to compete in the main championships under the UFC or Bellator label. The more fighters that AMMA can advance, the stronger the demand will become for emerging fighters wanting to be represented by AMMA promotions.

Developing its niche space, Alliance MMA has been pushing a concentrated effort toward the promotion of mid-level events, introducing and featuring emerging talent that can ultimately position AMMA as a premier “feeder league,” with AMMA intent on promoting its fighters to compete within the mega name promotion companies in the industry. The company is well on their way to accomplishing this goal, already setting into motion a plan designed to facilitate orderly and consistent growth. AMMA has been active in acquiring prominent and successful local and regional promotion companies and attracting and signing the most promising emerging talent (fighters). Additionally, AMMA is taking advantage of its well diversified executive team who can exploit opportunities of different scale and direction, whether it be fight promotion, media, or distribution and sales based production.

Even though the company has only recently emerged as an influential multi-regional promoter, AMMA is demonstrating to competitors in the industry that it has both the ambition and firepower to quickly develop and acquire the pieces required to perpetuate the aggressive, but managed growth strategy. And, it’s for that reason that AMMA has been extraordinarily successful in the acquisition of small, but influential regional promoters. A colleague familiar with the industry made it simple to understand. He said that promoters are not “selling out” to AMMA; they are “selling in,” knowing that becoming a part of the greater good can have a long-standing and mutual benefit. And, he added that at the pace at which AMMA is rolling-up these regional companies, it wouldn’t take long for them to establish a significant and respectable position in the MMA industry.

Alliance MMA Using A Roll-Up Strategy

With highly capable management in place, the mission and focus at AMMA are well defined, providing the strategic road map for what the company intends to achieve during 2017. Utilizing a “roll-up” strategy, AMMA is committed to creating a premier promotional showcase for emerging mixed martial arts fighters, in particular for those competitors who have aspirations of advancing to the sport’s highest level of professional competition.

Since becoming a public company in Q4 of 2016, AMMA has been aggressive but disciplined, in taking advantage of its new capitalization, acquiring or retaining the services of seven regional fight promotions, a fighter management firm, an electronic ticking platform, and a media production company. Each component at AMMA will be fully developed and is expected to provide a synergistic platform that will have every business soon contributing to current operations. These significant promotion acquisitions have proven their value by producing MMA events that have generated intense fan interest, have led to the signing and representation of a diversified stable of recognized and emerging fight talent, and have shown consistent ability to provide profitable event cards on a local and regional basis.

With the first tranche of acquisitions complete, AMMA is showing no signs of slowing down or losing its deal-making momentum. To the contrary, AMMA is continuing its quest to identify and acquire successful regional promotions, as well as expanding their MMA fan base by simultaneously acquiring and developing a world-class media production and distribution business. In other words, management is showing that they will not be content until they successfully develop an all-encompassing company, one that can promote fights, create and market media opportunities, and facilitate the ticketing and venue partnerships for each of its events. For AMMA, once these synergies become more mainstream to each event, the more likely it becomes for unencumbered dollars to fall to the bottom line.

After closing its IPO, AMMA was purposeful and strategic right from the start, acquiring Hoosier Fight Club, Cage Fury Fighting Championships, Combat Games MMA, Shogun Fights, V3 Fights, GoFightLive, and CageTix.

The good news for investors is that AMMA had no plans to slow down. To the contrary, AMMA has continued to press on the accelerator by acquiring additional MMA promotions and then integrating them into a seamless and efficient AMMA business platform. With each acquisition, the intent is to realize significant cost savings by taking advantage of synchronized business platforms that will not only provide economies of scale but will also strengthen AMMA’s ability to leverage their growth quickly. These savings may also become a tool to advance the vision of AMMA’s aggressive growth model that can transform AMMA into a prominent, fully integrated promotions and media company.

Where AMMA Wants To Position

Recall what was noted earlier. AMMA is not developing a business model to go head to head with the giants in the industry. However, don’t insinuate that management is not entirely committed to getting deeply entrenched in the fight business because they are 100% focused in that endeavor. And, better yet, investors can expect that management will also play it smart, finding the niches between those giants and scooping up many of the dollars that these jumbos gave gotten too large to see. And for a company like AMMA, with strict cost controls and a small float of shares, it does not take too many of these shrewdly found dollars to turn a profit.

To get those dollars, though, they need good events. For AMMA, a huge priority is to identify and attract the best of the best from the emerging fighter pool. Just as top athletes tend to go to the best sports programs throughout the United States, AMMA’s intent is to position themselves as the top “mid-level promoter.” From there, they can sign and eventually promote high performing fighters, albeit likely a small number, to the next level of competition, which in the best case scenario for a fighter would be the UFC. So, whereas the UFC is keen to sign and keep its high-profile fighters, AMMA’s goal is to nurture rising fighters through the development phase and get them promoted to the next level of competition. For AMMA, even though they lose a top fighter and potential event favorite, there is value in doing so.

Consider it this way, to exploit the potential value in bringing up competitive fighters; AMMA is, in essence, intending to build a “super mid-level conference.” Now, I use the term for example purposes to illustrate the business model for AMMA as it relates to their mid-level event concentration. As a top promoter of developing talent, AMMA is working to become the primary conduit to the highest competitive level in the sport in the eyes of professional prospects. Each of the promotions acquired by AMMA has already proven capable of moving fighters to the next level, specifically to the UFC. These “up-listing” placements then create a well-established reputation that creates real demand for fighters to sign exclusive promotion agreements with AMMA properties. As more competitors rise in class, to the UFC or Bellator, for instance, it becomes a marketing windfall for AMMA in their continuing ability to attract emerging new talent.

While in most cases the best talent tends to get acknowledged in the fight game, it’s important to note that even the best competitors are often at the mercy of their promoter. Consequently, if not provided prime time opportunities to showcase their skills, the short career window for advancement slowly begins to close, as the longevity in the fight business is not a long-term proposition. For a fighter to maximize their potential and to prosper in the fight business, it is imperative that they align their career ambitions with a promoter that has both credibility and a proven track record to move fighters up in class.

With that said, AMMA is proposing that its acquisition and development strategy will aid in building a substantial and sustainable development system to the top MMA promotion companies. The greater the intrinsic value provided to fighters by AMMA, the greater the likelihood that the company will continue to sign and represent top emerging talent. At that point, AMMA can leverage their success by attracting top, developmental stage competitors and becoming an in-demand promotion company attracting those fighters that have the ambition and determination to fight at the highest levels.

As the talent recruitment and regional acquisition strategy continue to materialize, AMMA will simultaneously focus on expanding its national sponsorship opportunities, and also intensify its local and regional sponsorship agreements. By capitalizing on core strengths to generate higher sponsorship rates based on its fight talent and premium fight cards, AMMA creates an intrinsic opportunity for increased event exposure and sponsorship demand, creating an additional revenue segment from their core business.

MMA growth is also organic, and AMMA will be a clear benefactor. It’s undisputed that MMA is one of the fastest growing sports in the world, and with the sport sanctioned in all 50 states; there is also no shortage of demand for MMA on a global basis. So, while considering the value proposition here at home for AMMA, investors should not discount the opportunities that will present themselves through both domestic and international distribution agreements.

Building Upon History

With ten acquisitions already completed, two more acquisitions pending with LOI agreements and additional purchases anticipated before the end of 2017, AMMA will be positioned to promote over 125 events per year, with the potential for that number to be considerably higher based on the company’s business strategy. Additionally, banking on the experienced management in place at AMMA, the focus will be on increasing revenue from each acquisition by expanding the average annual number of events for each promotion, with targeted increases of between 10%-20% at each company. The financial benefit of promoting additional events becomes more cost accretive based on AMMA’s consolidated business platform, taking advantage of economies of scale, reducing redundancies, and capitalizing on venue partnership opportunities that offer substantial compensation opportunities from locale’s or sponsors looking to host events.

Over the next eight months, AMMA will be managing the expansion of events held by its acquired target companies, as well as from prospective target acquisitions. The current plan calls for a total of 20 regional promotion companies to be rolled-up under the AMMA umbrella. Once in place, AMMA has publicly stated their intent to maximize revenue opportunity from each by orchestrating over 125 MMA events per year, highlighting over 1,000 of the nation’s top emerging fighters under promotional contract. Remember, AMMA is not trying to be an “average promoter,” it is their intention to be the “highest performing mid-level promoter” in the industry, attracting the best of the best from an enormous pool of available fighters. And don’t expect AMMA to fill it’s event cards with just any low-ranking competitor. AMMA intends to promote quality, not quantity during their sanctioned events, solidifying AMMA’s reputation as they continue to build the brand.

Once the regional pieces are connected to create a national market presence, AMMA then will look to leverage its name and credibility to secure sponsorship arrangements with many prominent consumer name brands. In addition to sponsorship revenue, AMMA will seize upon its sizable library of media content, taking advantage of assets within the target companies to monetize film, print, and online media. At that point, the profitability equation becomes apparent, and the sum of the parts may become the product for substantial revenue growth and bottom line profitability.

The AMMA Management Can Deliver Results

Like any emerging company, active and experienced management is essential, and AMMA is not short on executive talent by any means. AMMA is led by a diversified and well-experienced team of professionals, including:

Paul Danner, Chairman & Chief Executive Officer: Former CEO of three publicly traded companies, including a Nasdaq-listed roll-up venture. A broad-based executive with Fortune 50 experience who has conducted business operations on five continents, Mr. Danner formerly served as a Naval Aviator flying the F-14 Tomcat.

Robert Haydak, President: Former CEO of top ranked regional MMA promotion, Cage Fury Fighting Championships. Prior experience as a founder/CEO of two highly successful ventures provided a formidable foundation in all aspects of business operations. Former NCAA Division 1 wrestler.

John Price, Chief Financial Officer: Previous CFO of MusclePharm, a publicly traded sports nutritional supplement company. Seasoned CPA with broad operational experience in high growth domestic and international companies, including audit expertise gained through his prior affiliation with Ernst & Young.

James Byrne, Chief Marketing Officer: Veteran of arena sports marketing, creating media opportunities, joint ventures & marketing partnerships. Senior marketing executive for Ultimate Fighting Championship, World Wrestling Entertainment and Glory Kickboxing. Formerly operated a boutique marketing consultancy serving clients including Saatchi & Saatchi and SONY Pictures Classics.

Jason Robinett, Chief Technology Officer: Seasoned technology industry executive. Served as Chief Information Security Officer for Watermark Estate Management Services, a private entity responsible for Bill Gates’ personal and family matters, as well as Director of Information Security for Expedia, Inc. where he created the company’s global information security organization.

AMMA Building A Sizable Portfolio Of Promotions

After completing its IPO, AMMA has embarked on a steadfast journey to begin the process of maximizing shareholder value. Now, being just six months old as a publicly traded company, AMMA has quickly built a stable of revenue-generating promotions, each having strength on a regional and national scale. Of the ten post-IPO acquisitions made, seven are MMA promotion companies, one is a digital media sports platform, another specializes in facilitating an electronic ticketing platform optimized for marketing MMA events, and one provides a significant boost in its fighter management division with the acquisition of SuckerPunch Entertainment. A brief introduction to each is certainly warranted:

· Cage Fury Fighting Championship (CFFC): Based in Atlantic City, New Jersey, Cage Fury Fighting Championship has successfully promoted over 50 professional MMA events. CFFC keeps its fight promotion focus in the northeast corridor, concentrating its efforts in the New Jersey and Philadelphia markets, with additional regional MMA promotions scattered throughout the northeast. CFFC enjoys a Top 10 ranking in regional promotional activity and has agreements in place with CBS Sports Network and GFL.tv. to broadcast local and regional events.

· Combat Games MMA (COGA): Combat Games is a Kirkland, Washington-based MMA promotion company founded by Washington MMA pioneer Joe DeRobbio, who has built the company into a regional powerhouse in MMA fighting. AMMA will have the benefit of DeRobbio’s 13 years of experience as both a referee and advocate for fighter safety, where he will join forces with Jason Robinett to lead AMMA promotions in the Pacific Northeast Region. COGA has promoted over 46 shows primarily in Washington State.

· Hoosier Fight Club (HFC): Considered by many as the Chicagoland leader in MMA promotions, HFC is credited with promoting the first professional MMA fight in the state of Indiana. HFC has been an instrumental force in expanding the footprint of MMA in Chicago and Indiana. HFC was founded in 2009 and has promoted over 26 events, including the first sanctioned event in Indiana in January 2010. HFC has sent or promoted eight fighters to the UFC and several to Invicta Fighting Championships.

· V3 Fights: Considered as one of the fastest growing MMA promotion companies in the Southern region, V3 is based in Memphis, Tennessee. V3 is credited with bringing sanctioned MMA fights to the state of Tennessee, and has subsequently built a reputable brand and reputation for fight quality within a region that expands into six large venues in the state, making V3 one of the fastest growing MMA promotion companies in the south. V3 has promoted 45 events primarily at event centers in Memphis, Tennessee and elsewhere in Tennessee, Mississippi, and Alabama.

· Shogun Fights: Based in Baltimore, Maryland, Shogun Fights has become a premier MMA promoter, often featuring fights to capacity crowds at the Royal Farms Arena. Additionally, Shogun has expanded events throughout the Mid-Atlantic region. Founded in 2008, Shogun has promoted 14 fights at the Royal Farms Arena in Baltimore, the same venue that hosted UFC 174 in April of 2014.

· GoFightLive! (GFL): Acquired in 2016, GFL provides AMMA with a sports media and technology platform that remains entirely focused on the combat sports industry. GFL brings an extensive video library, as well as a proprietary platform that can deliver online streaming video content, the production of televised events, and a seamless platform that offers a substantial social media presence that connects MMA enthusiasts from around the world. With a media library containing comprising approximately 10,000 hours of unique video content, and the expected addition of about 1,200 hours of new original content annually, GFL maintains the largest continuously growing database of MMA events, fighters, and fight videos in the world

· CageTix: AMMA acquired CageTix to integrate an electronic ticketing platform and service to complement its promotional activity across the United States. CageTix is recognized as the leading ticketing service in MMA and is the first ticketing service to concentrate solely on combat sports, inclusive of boxing, Jiu Jitsu, Muay Thai, and MMA. The acquisition provides AMMA the opportunity to expand not only its revenue, but to track valuable consumer data that will help to define an efficient, strategic, and targeted marketing campaign. CageTix presently services the industry’s top international mixed martial arts events including Legacy, RFA, Bellator MMA, King of the Cage, and Glory. Since its inception, CageTix has sold tickets for over 1,200 MMA events and currently services 64 MMA promotions operating in 106 cities.

· IT Fight Series: Founded in 1995, ITFS currently hosts approximately ten MMA promotions per year in various cities throughout the Ohio region. Respectively, in December of 2016, IT Fight Series promoted its 70th show at the Ohio Expo Center in Columbus to a sold-out crowd. The IT Fight Series brand has developed more than a dozen fighters who went on to compete in professional MMA competition with Ultimate Fighting Championship (UFC), Bellator and other premier promotions.

· SuckerPunch Entertainment: In January of 2017, AMMA acquired SuckerPunch, widely acknowledged throughout the industry as the world’s top MMA fighter management and marketing company. Now operating under the Alliance MMA umbrella, SuckerPunch will continue to provide world-class representation for fighters inside and outside of the cage. SuckerPunch currently has more than 100 fighters under contract worldwide.

· Ring Of Combat: On September 30, 2016, the Company acquired the exclusive rights to the Ring of Combat fighter library, which includes professional MMA, amateur, and kickboxing events and covers approximately 200 hours of video content. Ring of Combat has sent about 90 fighters to the UFC. The Company has also secured the media rights to all future Ring of Combat promotions.

· Kings Highway Media: In February 2016, AMMA established a noteworthy relationship by retaining Kings Highway Media, LLC for both domestic and international omni-channel media rights distribution. The relationship with Kings Highway supports AMMA’s MMA focus in delivering upon key revenue drivers inclusive of live television, content, and sponsorships. Kings Highway is a full-service global media brand distribution advisory, highly adept at introducing and expanding the domestic and global media presence in venture capital, private equity, IP rights holders and sports & entertainment companies in the United States and internationally. Kings Highway directs the building of equity value in addition to multi-divisional revenue growth of its clients’ branded assets.

Going forward under the Alliance MMA umbrella, each of these regional promotions and acquisitions will continue to operate under their respective names, leveraging the valuable brand equity they’ve built over the years.

Capital Structure And Liquidity

Beyond the significant opportunities already being realized at AMMA, the emerging story would not be complete until the specifics of both the capital structure and cash liquidity details are noted. In that respect, if, as an investor, you are looking to take a position in the only publicly traded MMA stock, it will be reassuring to know that AMMA is about as clean as they come regarding capital structure and cash liquidity.

AMMA is carrying no historical baggage. Unlike many newly listed small-cap stocks, AMMA did not reverse split into a former shell of the past, taking on no legacy issues or past reputation. The most recent 10-K shows nothing but clean agreements, no disgruntled legacy shareholders, and an outstanding share count that sits at only 9,022,308 shares. Importantly, of those roughly $9 million shares, only 2,222,308 shares are not being held tightly by insiders. These metrics leave a tidy capital structure at AMMA, free of debt and in a strong position to capitalize on the direct revenue models being brought forward by the recent spree of accretive acquisitions. Investors should pay little attention to those outspoken investors, or legal eagles, who point to the delay in the first 10-K filing as a red flag. To them, I say, what better way for management to expressly show their commitment to full disclosure than to delay their first 10-K filing until they were 100% comfortable with their accountant’s confirmation of opinion. Despite the headlines made by incentivised commission based legal teams, AMMA did the right thing. They completed, without deceit, each obligation outlined and mandated by the SEC. Investors should praise management and use those conspicuous legal headlines as a part of next years firewood.

On a liquidity basis, AMMA reported over $4.7 million in cash under their 2016 10-K report and a stock treasury that enables the company to issue up to a total of 45,000,000 shares on a fully diluted basis. No worries about the O/S climbing to the hundreds of millions here, with a cap at 45 million shares, the Treasury holds ample firepower to continue the acquisition process without serious near-term dilution to current shareholders.

With no skeletons in the closet and a cash balance that offers near-term growth opportunity without the fear of significant dilution, investors may find an entry at these levels a welcome opportunity. Keeping in mind that each promotion acquisition is immediately accretive to current revenues, the purchases made by the company also come with the near-term financial benefit. Thus, while there may be some sporadic near term dilution to continue the build-out, shareholders should also recognize the value of those assets almost immediately, and according to the business model, investors should model their yearly projections at between 10%-20% higher than current revenue and event figures show.

The Scorecard

AMMA is interesting on several fronts, each of which may offer significant and near-term value appreciation to shareholders. First, the low share count and the immediate impact of acquisitions plays directly into bringing the company to profitability in relatively short order. Second, with no debt, and a management team that is bent on building shareholder value, the pace at which the company is delivering on its stated goals is quite encouraging. While investors should not necessarily expect the company to become profitable in the next few months, there is certainly the strong likelihood that AMMA is clearly positioning themselves for a strong 2017, taking advantage of the significant momentum gained at the end of 2016.

Finally, from an investment perspective, finding an opportunity like AMMA, with no legacy issues, a clean balance sheet, a low share count, and experienced management in place, is a comforting spot for investors to consider a position in the company. With the company demonstrating the ability to make all of the right moves, I expect that the shares will soon knock-out the stubborn resistance, and work their way higher. Once investors catch a clue as to what AMMA is actively building, shares may indeed show the strength to recapture all its IPO price of $4.50 and more. From there, guidance and acquisition are the keys, and as long as the deals continue to be accretive to growth, I believe that the share price will win the bout, moving higher in knockout fashion.

Disclaimer- CNA Finance is NOT an Investment Advisor. Our goal is to bring both news and under discovered stocks to the attention of investors to assist in making smart decisions in the market. CNA Finance is a for profit company. That profit is generated through three (3) different types of relationships. First and foremost, we work with pay per click and CPM advertisers on banners. We also have affiliate relationships with various companies where we earn a portion of the sales we refer. Finally, we may have relationships with some of the companies or IR firms that represent companies mentioned within our works in which we are compensated in cash and or stock for consulting, investor relations, and Press Release services. World Wide Holdings paid CNA Finance $3,000 to hire Perceptive Analytics for research and writing services as well as other investor relations services provided to Alliance MMA by CNA Finance. All information researched and provided through any article associated with Alliance MMA and published on CNA Finance is public information that is documented and available upon request. CNA Finance encourages all investors to seek professional advice before making any investment decision.

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Premier Holdings Corp PHRL Stock News

Premier Holdings Corp (OTCMKTS: PRHL)

CNA Finance is no stranger when it comes to seeking out emerging opportunities in the markets. While the CNA research team generally covers stocks that have valuations in excess of $100 million in market cap, we do entertain investor queries about stocks that are showing signs of having the ability to become a leader in a given sector.

Premier Holdings Corporation (PRHL) is a company that has attracted CNA Finance investor attention, with the CNA Finance team being challenged with covering PRHL to address that investor interest. While the team does not generally cover stocks that are priced at $0.08 cents per share, that does not mean that we ignore investor interest, nor do we avoid stocks that may be on the verge of delivering significant shareholder gains in the relative near term. We believe that PRHL holds potential.

With that said, the CNA Finance team reached out to PRHL, and allowed the management team an opportunity to re-introduce the company, one that has been in business since 1971. In doing so, PRHL addressed the past, present, and future strategies of the company, and explained how some of the past strategies, and most recent strides forward, have helped to shape the direction of the company for 2017 and beyond.

Following, is a transcript of our exclusive interview:

CNA: First, let me start by saying that investor interest in PRHL is emerging, and while the sentiment is unequivocally positive, investors still have questions about legacy issues from the past few years. In 2014, PRHL entered into a proposed acquisition for 85% of Lexington Power & Light. Did that deal close and can you explain the history of that deal?

A: Yes, the deal indeed closed and we were well on our way selling their product. But soon after completion we learned that certain representations were not accurate. Their debt service (cost of capital) was much higher than represented and made their business impractical for us and as you would expect, there was a resulting lack of confidence in the management of LP&L. So, we unwound the deal.

CNA: Did this unwind actually provide some ultimate benefit?

A: Absolutely. In the short time we were operating we proved that the concept was sound. We sold a product, the “reset,” at a higher price than the market and we were successful in doing so. And our topline revenues showed this. But LP&L management and cost of cash we not suitable for us. For full transparency: when the credit facility for buying power is put in place it is typically for 3 years. LP&L’s $2,000,000 line cost them over $600,000 in interest and fees. We believed we could re-negotiate the line and did have a new term sheet in hand. However, LP&L had an administrative issue and they were unable to get an updated credit facility. This, we believed, would prohibit profitability. Necessitating our decision to unwind the deal.

But our initial success in sales indeed indicated that, with a more competitive, industry-standard cost of cash and a professional management team, we should achieve the projected 8 -10 % EBITDA on our AIC business. And let me just add that with a better-than-average credit facility and more expert management we could achieve 12% EBITDA… which we believe we are the path to achieving.

CNA: And, as to the second concern, the current outstanding share count: Do you think that having in excess of 300 million shares outstanding should be of concern to investors?

A: It is the market value of those shares which is the issue. With our 200,000 accounts alone, valued at $300 each, our portfolio value would be at $60 million (as we move existing customers, former customers and new sales to the supplier), which is more than double our current market Cap. So once we place the majority of these accounts and future accounts, into the Supplier, the stock price should reflect this. We anticipate it will take about 2 years to accomplish this. This does not take into consideration the real enterprise value of the company which can generate thousands of sales per month.

CNA: Over the past few years, PRHL has entered into some potentially lucrative deals. Back in 2012 and 2013, PRHL entered into a purchase agreement with The Power Company (TPC) to purchase 80% of the that company. How has that deal benefited PRHL?

A: TPC has been the catalyst for the growth of our company and PRHL was the catalyst for their growth. As we provided capital, TPC grew from 11,000 sales to over 200,000 and should produce an additional 80,000 this year (not accounting for expansion). These are not only customers for deregulated power, but become candidates for our other businesses, E3 (efficiency products and services) and of course AIC. This pure marketing machine is critical and fundamental to our business and has been successful beyond our projections.

CNA: So, with that deal allowing PRHL to benefit from a deregulated energy space, is PRHL now fully prepared to capitalize on an estimated $300 billion US market and what synergies has PRHL already realized from that deal?

A: PRHL has benefited tremendously from acquiring the majority of TPC. TPC has proven to be one of the TOP resellers in the nation. In Illinois, one of the most competitive markets in the nation, we have about 2% of the market already. As a comparison, there is another well-respected company that took 12 years to achieve 200,000 contracts, we did it in 3 years. They do over $100 million a year as a supplier and we expect to exceed their performance by our second year. Although our projections show slower growth, we have no way of knowing the impact of the portal but we expect it will be a game changer. This is very similar to what happened to Telecom. Do you remember years ago when everyone had to use Ma Bell for their long-distance telephone service? That changed when the telecom industry deregulated, which gave customers a choice and created a huge opportunity for the “baby bells.” Which created industry giants like Sprint and Verizon and made their thousands of investors rich. Not only those companies, but as the entire industry was rolled up, hundreds of companies benefitted. What were they buying? Customers. The same is now true in many states with the deregulation of electricity.

CNA: Can you explain deregulation in simple terms? Is PRHL already benefiting from the program?

A: Simply put, deregulation is a government program to protect consumers by assuring competitive pricing. Think how the telecom deregulation changed telephone charges – now understand, energy deregulation is estimated to be 11x bigger! Are we benefitting? Yes. We believe we are among the top 5% of resellers in the nation if not higher. We expect to maintain and grow our piece of this massively expanding market. We have proven this by our ability to capture about 2% of the Illinois market, again, one of the most competitive in the nation. We should only do better in other markets. As we obtain our licenses in other states and then launch our door-to-door and call center strategies we expect similar results. When we add our Energy Services Portal (ESP) and it’s affiliate marketing functions, we should see increased traction.

CNA: So, where exactly is the opportunity for PRHL?

A: We have a running start over our competitors. Opening “Deregulation” has been the only marketing strategy for many suppliers. They wait for the utility customer to come to them. We have been aggressively marketing to customers. We do not rely on others to control our fate. As each state opens, we have the ability to go in with our systems and rapidly deploy out strategies. We have only scratched the surface.

CNA: You mentioned and described The Power Company, but, there are two other subsidiaries within the Premier Holding Corporation portfolio, E3 and American Illuminating Company. Each of these subsidiaries offer distinct value propositions. Can you explain the role of each in delivering and building scale for PRHL?

A: AIC is the linchpin for financial success. While TPC has been garnering these 200,000+ contracts, they receive only a commission on those sales. As we migrate those contracts to the power supplier (AIC) we should see a 20x increase in topline revenue and a doubling of profitability on the same effort we are expending to gain only that commission. It is with the supplier where the portfolio value of the contracts is realized. This is where the $60 million in contract value would be shown.

E3, with its relationship with Sustainability Partners is a natural fit. After we have sold our existing clients their deregulated power, they become a trusted client for additional efficiency sales. SP will be offering products and services to our thousands of commercial clients. E3 will be offering Smart Home and other efficiencies to our residential clients.

CNA: E3 has a strategic partnership already in place with Sustainable Partners LLC., a Blackrock portfolio company. This sounds like a significant opportunity to imbed a large footprint in the space. How can PRHL leverage off this partnership?

A: Yes, this requires further discussion. Sustainability Partners has a model we believe will be just as disruptive to this market as Uber has been to taxi’s and Airbnb has been to hotels. We are proud to be among the select few to be able to offer their product to our commercial clients. They value our marketing expertise and we have inundated them with leads. We have over 5,000 commercial clients we are vetting for them and we expect this number to grow to between 30,000 and 50,000 in the ensuing years, especially with the roll out of ESP.

CNA: American Illuminating Company also deserves more attention, especially in that the relationship can position PRHL to benefit enormously from a revenue standpoint. What are you expecting AIC to deliver?

A: Right now TPC distributes its contracts among 30-40 different suppliers and those suppliers are reaping the benefits of TPC’s efforts for topline revenue and additional profitability. We plan to have 80% or more of residential and commercial customers to move over to AIC where we will then garner the entire utility bill as revenue and experience additional profits for the work TPC performs.

CNA: In examples that we went over, you described how the leverage from the AIC subsidiary may deliver exponential amounts of increased revenue. How can that happen?

A: Remember that TPC does a herculean effort to earn a commission on a sale. Let’s keep it simple and say that one residence consumes $100 of power each month. Our commission might be $2 – $5 per month. Not much, but it adds up. If we supplied that power we would record the entire utility bill as revenue… $100 as opposed to $2 – $5. In addition, if AIC makes 10 – 12% profit that’s an additional $10- $12 PROFIT, again compared with the $2 -$5 we were getting from one residential sale. Can you think of another industry where just by adding an entity in front of what you are already doing you can change the value proposition so dramatically? We have been making our current suppliers very rich. Our plan has always been to do that for ourselves and our shareholders.

CNA: Perhaps one of the most interesting aspects of PRHL is the Energy Sales Portal, which is truly a remarkable asset. Before we get into the benefits of the portal, can you provide an introduction of this technology?

A: Of course. The industry right now depends mostly on paper to perform these transactions. Each supplier has its own version of a contract and there is a time-consuming and laborious process of contacting a prospective customer, going back to a supplier and getting a quote based in their profile, awaiting the client to say yes, hand sign contracts and get third party verification. This method is fraught with inefficiencies and potential for errors. ESP automates this process, streamlining it, and providing rapid turn-around of quotes and compliance. This is a web-based tool that the sales person uses, either at their desk when they are on the phone with a prospect, or on a hand held device when they visit them at home, and it takes a process that might take 30 minutes and a few days for approval, to mere minutes and immediate approval.

CNA: I’ve heard investors say that the Energy Sales Portal can do for energy what Lending Tree did for the mortgage industry. How so?

A: Just as Lending Tree automated the loan processing function and disrupted how all loans are processed today, so should ESP impact the deregulated power sales industry. There is no universal sales tool for the industry. There are bits and pieces out there but no-one has put it all together, especially the “last mile” which is automating the communications between the sales person and the client. ESP could be the first universal (covering all suppliers and also the entire sales process from prospect identification to close and compliance verification), tool to accomplish this.

CNA: So, the portal can deliver web-based automated sales, as well as delivering enormously competitive efficiencies. From a competitor standpoint, does the Energy Sales Portal provide a significant competitive advantage for PRHL, maybe even keeping competitive threats to a minimum in the markets you serve?

A: There is a need for such a product and we have been testing and refining ours for years with the original intent of making it robust and available to all resellers, not just a narrow internal tool. We plan to offer the technology to ALL resellers. Now this may sound crazy to give our competitors our proprietary technology, but think it through. Instead of trying to acquire all these businesses, they, in essence, work for us. Not only will we get a piece of every transaction regardless of what supplier they use, but we will own the database. Protecting their client for deregulation is a given, but that database can be used for other non-power sales. Such as selling E3 products and services, or selling the information to solar companies or others who value knowing the energy profile of a prospect. And finally, since our supplier is among the offerings they present to their client, AIC can have “last look” and decide if they want to price to win. In that sense, it is like Progressive Insurance. We will show you our competitors’ prices and our own, creating a higher likelihood of winning the contract.

CNA: Of course, management is the key to driving all of the company’s strategic initiatives. PRHL has built quite a respectable and diversified team of talent. Can you highlight the members of your team, and explain how the diverse nature of this team is equipped to deliver near and long term success?

A: We have an impressive Board that is very involved in the strategic direction of the company. Dr. Woodrow W. Clark, II, MA3, Ph.D. was a contributing scientist to the U.N. IPCC that won the 2007 Nobel Peace Prize. He served as Manager of Strategic Planning for Energy at the Lawrence Livermore National Laboratory and was Senior Policy Advisor for Energy Reliability to then California Governor Gray Davis with a focus on renewable generation, advanced technologies and finance.

Board member Mr. Lane Harrison advised large multi- national corporations such as Bicoastal Corporation, (Formerly Singer Corp.) where he served as Director, and Bicoastal Financial Corporation, serving as President/Director. Mr. Harrison has over 30 years of business consulting and sale/marketing experience. He has lectured extensively to the professional advisor community.

Mr. Robert Baron is a director and committee member of various public companies, including PRHL. Prior public boards include, Hemobiotech and Suburban Bancorp. Mr. Baron was also owner and president of various companies including a subsidiary of Tultex Corp with over $200 million in revenues, and a privately held company with $80 million sales country wide.

Our Management team has decades of experience, and just to mention one. Mr. Patrick Farah who most recently co-founded U.S. First Energy (USFE). As CFO and CMO of USFE, Mr. Farah was instrumental in establishing the company’s exclusive partnership with Suez Energy – one of the 100 largest companies in the world. Mr. Farah’s company was the exclusive retail sales vendor for Suez Energy in the United States, where he oversaw the development of a total contract value with Suez of over $400 Million – more than 15 times the volume of Suez’s previous vendor. While procuring a residential base of 50,000 customers, USFE achieved the prestige title of top First Choice Power’s sales broker. USFE has subsequently enhanced its business model, and is now branded as The Power Company.

CNA: Let’s change course and discuss investment considerations and opportunity. How would you answer an investor if asked why he should buy PRHL stock?

A: If we are able to convert our portfolio value we should double our market cap within 3 year and this is not considering our enterprise value. Again, 200,000 contracts valued at $300 each is $60,000,000… and that is not counting the revenue that these contracts generate during their term. And that is using todays performance. We plan to continue to grow this number of contracts. If only at the current pace, that is 80,000 contracts a year. If we scale by expansion and the use of the portal, we should see even greater performance. We are poised to continue to build revenue and profits on a scale that is rarely seen in most industries.

CNA: If that same investor, after liking the considerations provided, asked about cash on hand and access to future capital, how would you answer that question?

A: We have over $2 million cash on hand. We have a PPM issued though WestPark Capital and we have investors standing by offering us up to $10 million should we need it when we execute our planned up-listing to Nasdaq. Cash is not an issue for the time being and foreseeable future.

CNA: Along those same lines, financial projections are a vital consideration for investors. Can you provide some financial projections, and in turn offer a projected asset valuation based on those projections?

A: By the end of Year 2 we expect AIC to do over $67 million topline, TPC will add $9 million and E3 $8.5 million. That totals around $85million in topline revenue, resulting in $3.5 million to the bottom line. Mind you this is still a ramp up year for AIC and shows only a 3% EBITDA for that unit. In the future, we will experience over 8 – 10, to maybe 12% on that business line. But even with only a $3.5 million EBITDA at 18x multiple, that’s a $64 million valuation. I hesitate to go beyond year 2 because it grows so rapidly it seems unbelievable, but the math is there.

CNA: Finally, many investors work hard to search out potential breakout stocks. Based on the known variables already in the PRHL arsenal, can you provide a best-case snapshot of PRHL five years from now?

A: Just adding the suppler will change our business dramatically on the same level of work we have been performing for 3 years. With our plans to expand into additional states, launch our sales portal, and partner with Sustainability Partners on additional large scale sales, our 5 year projections seem too good to be true. Just for AIC we go from $7 million in sales in Year 1 to $67 million in year 2. You can see the potential is tremendous for growth in the subsequent years.

End Interview

Stock price does not always reflect what a company is doing, and in the case of PRHL, this statement may prove true. Based on what management has told us, PRHL is positioning themselves to take advantage of a potential boon in the energy space. Once the company begins to gain momentum, taking advantage of its strategic and proprietary advantages, PRHL may very well emerge as a powerful player in the deregulated energy space. PRHL already has strategic partners in place, and has the trust from regulatory commissions across the United States. All that is left now is for PRHL to synchronize all of its initiatives together to produce a reliable and recurring revenue model. Once they do that, the share price and valuation will find its proper place, offering shareholders significant potential upside from current levels.

Like all investments in the micro and nano-cap world, investors should keep a focused eye on breaking news and company filings. Based on management’s remarks, PRHL is worthy of investment consideration for investors with a high risk, high reward trading strategy.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation.

Additional Disclosure: I have no position in any stock mentioned, but may initiate a long position in PRHL within the next 72 hours.

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Aytu BioScience Inc AYTU Stock News

Aytu BioScience Inc (OTCMKTS: AYTU)

Let’s get an important disclosure out of the way quickly: I am long Aytu BioScience, and for good reason.

Now, while some may argue that this statement is merely an overzealous pitch, it isn’t. In fact, the case for AYTU being a hidden gem is just as powerful as it was in December of 2016, when I first presented my thesis. Even though the company’s share price hasn’t been able to catch its footing at the start of this new year, I contend that the fundamentals are already in place to justify a correction to the upside for the stock.

Remember AYTU?

AYTU has not been flying completely under the radar. The stock has enjoyed quite a bit of positive investor sentiment, acknowledging the company’s recent acquisitions as well as Aytu BioScience’s therapeutic and diagnostic platform in urology. Unfortunately, as is the case for many emerging biotech companies, share price is often less reflective of company accomplishment and potential than it is of simple market momentum, either positive or negative.

With the stock trading at roughly a dollar a share, perhaps much of that value is being hamstrung based on the fact that many investors have a misunderstanding of the company’s current position. To that end, perhaps a re-introduction to the company is in order, providing an even more robust thesis as to why AYTU may be undervalued at current levels.

Aytu BioScience Commercial Stage

Since 2016, the general description of AYTU remains the same. The company is a small, commercial stage specialty pharmaceutical company that remains focused on bringing innovative treatments and diagnostics to urologists around the world. Unlike many emerging companies that have no commercialization to speak of, AYTU currently has three FDA approved drugs and one CE Marked diagnostic device that hold the potential to address large needs within the urology field, and each of the products come with unique offerings. All four of the company’s products are currently commercialized, and Aytu BioScience has spent the better part of the last year building its fully integrated commercial infrastructure to support sales efforts and to generate revenue-building momentum.

AYTU has four commercially active products in market: Natesto, , ProstaScint, and Primsol each holding regulatory approval in the U.S., and MiOXSYS having regulatory clearance abroad. While Natesto may offer the most compelling reason for investment consideration into AYTU, MiOXSYS, ProstaScint and Primsol deserve a brief overview as well.

MiOXSYS For Male Infertility

MiOXSYS is a first-in-class in-vitro diagnostic device. Already CE marked and its regulatory pathway for U.S approval defined, MiOXSYS is being positioned as a new test that can rapidly help clinicians accurately identify infertile male patients, facilitating appropriate treatment strategies that can be immediately implemented. The speed of the results allows clinicians to take immediate action, improving the patient’s chance of fertility. The MiOXSYS device offers a recurring revenue model from the sale of disposable sensors, similar to a razor/razor blade sales and replacement model.

The market opportunity is substantial, with an international market estimated to be $825 million per year. In the U.S. AYTU’s target market of men between the ages of 25-44 adds additional market potential of nearly $100 million per year. The MiOXSYS device is already establishing a strong global footprint, with the device currently placed in 17 countries worldwide. Sales and revenue guidance is expected to be updated in the coming quarters.

ProstaScint For Cancer Imaging

ProstaScint is an established, proprietary monoclonal antibody imaging agent. It is the only FDA-approved prostate-specific SPECT imaging agent available on the market. ProstaScint works by binding glycoprotein expressed by prostate epithelium, prostate specific membrane antigen (PMSA).

Aytu BioScience’s ProstaScint enables accurate staging and guides appropriate treatment, with emphasis on both high risk and newly diagnosed patients, intended to identify specific organ defined disease. ProstaScint is being further positioned to address treatment failures with post-curative intent to identify candidates for potential localized therapy.

During its clinical trial, ProstaScint’s performance was clinically and statistically relevant. Plus, ProstaScint has already been significantly improved since FDA approval. The imaging produces greater than 95% accuracy, sensitivity, and positive predictive value in intermediate-risk and high-risk patients, demonstrating clear advantages over imaging procedures routinely being used and cleared by the FDA.

ProstaScint is a viable shot on goal, with ProstaScint’s score card indicating a 95.7% success rate for accuracy, a 95.7% success rate for imaging sensitivity, and a 100% success rate in its positive predictive value.

Primsol Solution

Primsol is the second revenue-generating product in the AYTU arsenal. Primsol has an established prescriber base, and the company is currently marketing Primsol in a pediatric co-promotion. AYTU sees opportunity for Primsol to be re-positioned to urologists to treat urinary tract infections.

The product has an opportunity to treat over 8.3 million office visits annually, and is ideal for elderly patients who have difficulty swallowing pills or are allergic to “sulfa” compounds. Like the other products in the Aytu BioScience portfolio, Primsol has advantages over the competition. It is the only FDA-approved liquid formulation of trimethoprim, and is the only approved standard of care antibiotic for treating uncomplicated urinary tract infections in a novel formulation without sulfamethoxazole.

Primsol is currently enjoying approximately 26% of current prescriptions being written to treat urinary tract infections, and this is without any aggressive commercial promotions in place.

Now, even though any of the former three products may serve an investor well once AYTU generates the marketing muscle to provide aggressive sales support, the largest near-term opportunity may lay in Natesto, another FDA approved product.

Natesto May Captain The Growth

Acknowledging the promise and market position of MiOXSYS, ProstaScint, and Primsol, Natesto offers perhaps the most lucrative current opportunity for AYTU, and Natesto has the potential to both disrupt the urology market and significantly improve the standard of care for patients. Natesto is the only FDA-approved nasally administered testosterone, and is prescribed and indicated to treat hypogonadism, commonly known as low-testosterone.

The prospective market for a potentially better treatment like Natesto is significant, with the market being pegged at roughly $2 billion per year for testosterone replacement therapies. The goal at Aytu BioScience is for management and the sales team to demonstrate why Natesto is a better option to treat low testosterone compared the current standard care of treatment. When making the comparison between Natesto and other treatments, a few aspects clearly stand out right from the get-go.

First, Natesto is nasally administered. In fact, it’s the only testosterone replacement therapy in the world that is delivered in that manner, and this benefit alone may allow the therapy to gain traction and aggressively grab a large portion of the $2 billion market. Natesto has been gaining traction since its launch in late 2016, with revenues continuing to ramp higher as the company sales force penetrates the barriers to entry, which sometimes keep more advantageous therapies, like Natesto, at a disadvantage when trying to face down the marketing and sales budgets of large pharmaceutical companies. While these barriers take time to dismantle, ultimately the patients have the right to be treated with the most effective course of treatment, and also to be offered product alternatives that have a highly proven profile of producing less side effects and unintended results.

For instance, Natesto, by being nasally administered, eliminates almost all of the exposure risk associated to testosterone treatment products that are applied topically to the skin or through painful subcutaneous or intramuscular injections. This advantage alone is significant, and represents a huge advance over currently marketed products.

What’s The Big Deal About Aytu’s Natesto?

“Huge opportunity”, he yelled – and here’s why:

Current methods of treatment require a patient with low testosterone to topically apply the treatment product on their skin, whereby it carries a substantial risk of skin transference from the patient to any person who has even minimal skin contact with the patient. Even in the event of casual contact with a female partner or child, there is concern that there can be a transference of testosterone to a family member or friend, which could potentially trigger a host of unwanted male-trait-enhancing effects in women and children. For patients who would rather not see their wives or daughters growing full beards as a side effect of testosterone contact, both the convenience and safety factor of Natesto is reason enough to choose the nasally administered treatment. From there, as long as the medication is properly secured, the likelihood of unintended testosterone treatments to people not requiring the therapy is almost entirely eliminated.

The FDA has not been blind to the issue, either. The potential transference of testosterone to unintended recipients has caused them to assign a “black box warning” to all topically applied testosterone treatment therapies. In contrast, Natesto does not have the same warning, alleviating a major safety concern while also dramatically improving the way testosterone is delivered. The question then becomes, why aren’t all doctors prescribing Natesto? Other than contending that big pharma has the power to control and influence doctor’s prescribing habits, the rest of the answer is “it makes no sense as to why Natesto is not the current standard of care.”

The “it makes no sense as to why Natesto is not the current standard of care” answer is based on several apparent product improvements and patient compliance efficiencies. First, AYTU’s Natesto is administered only 2-3 times daily, with one pump into each nostril. Patients achieve maximum concentration within 40 minutes after the first administration. These results are dramatically quicker than current methods, and because of the relatively short duration of action, patients are also afforded the flexibility in achieving their optimal testosterone levels throughout the day. Additionally, this 2-3 times daily administration more closely resembles the natural daily rhythm of hormonal production in the male body – ultimately enabling men with Low T to feel more like themselves.

From an IP standpoint, Natesto is patented into the year 2024, with multiple strong patent families protecting the product. Further, AYTU will enjoy an exclusive right to license Natesto in the U.S for at least that long, providing enough runway to address the benefits of Natesto to both urologists and to an industry, educating them on the treatment benefits of AYTU’s therapy and potentially changing the method as to how practitioners are treating low testosterone patients. And, while the trends take time, AYTU is demonstrating prescription growth for Natesto, and company management has expressed that, in 2016, current prescription levels had already exceeded expectations.

Other Natesto Benefits

Focused on an exclusive licensing agreement in the U.S., AYTU is targeting the 13 million men already diagnosed with low testosterone. Currently, the options include topical treatments, all which come with a “black box warning”. The warning is significant, by the way – it indicates that unintended transference could cause androgen/male trait enhancing side effects in women, including hair growth, male pattern baldness and additional male trait changes. These same effects may occur in children as well.

These risks are not only casual touch related, as transference can also occur from unwashed clothes, unwashed areas in a shower or bath, and unwashed counter space where the product had been stationed. For those who are feeling frisky, the warning says to be sure to wash the application area thoroughly with soap and water prior to contact. This may cause opportune moments to become quite inopportune, and relying on a set of wet-naps may not offer the protection intended.

In the pivotal clinical trial studying the safety and efficacy of Natesto, 91% of patients in the three time daily dosing study group achieved normal testosterone levels at day 90. Additionally, greater than 70% of men in the twice daily treatment group achieved normal testosterone levels at day 90 as well.

Of significant importance to many male patients, Natesto demonstrated notable improvement in the International Index of Erectile Function, causing statistically significant improvements in each of the five domains of erectile function, with a supporting P value of P<0.0001. The majority of the effect on erectile dysfunction was evident by day 30 of the study.

Natesto Position And Opportunity

Natesto is being positioned for active men with low-testosterone between the ages of 45-64, for whom convenience, discretion, and quick use of a testosterone replacement treatment is important. The nasal application is brief and easy to use, and does not interfere with or complicate travel or work schedules. Unlike topical solutions, it’s not time consuming to administer and allows for discreet dosing. It also eliminates other options, including inconvenient and costly in-office procedures with regular implants that have been shown to cause side effects, such as the ones shown on the Testopel prescribing information.

With 70% of the men in the Natesto pivotal trial indicating that they would switch from their current replacement therapy to treatment with Natesto, AYTU is encouraged to seize upon the market potential staring them in the face. With even a 5% market share, AYTU can be in a position to generate over $100 million in annual sales, and with prescriptions reaching an all-time high coming out of 2016, AYTU is positioned to capitalize further as the marketing and sales promotion continue to gain traction in the market.

To prove their commitment, AYTU, on Wednesday, announced that the company has increased its sales team by 20%, primarily driven by the increasing growth of Natesto, in both prescription and revenue. This move further punctuates the fact that Natesto is continuing to gain traction and successfully penetrate the low testosterone and testosterone replacement market. This addition establishes the AYTU footprint in over 40 territories, inclusive of multiple territories in large metropolitan areas that are being divided to optimize coverage. With the additional and coordinated geographic coverage, AYTU is targeting the estimated 7000 U.S. testosterone replacement therapy and low testosterone prescribers. AYTU expects that the sales force expansion will be completed by the end of June 2017.

AYTU Upside Opportunity

After reading the prospects for AYTU, the picture of the emerging gem scenario may have become more clear for investors. AYTU already has four commercialized, approved products in place, and is gaining momentum quarter over quarter.

Natesto was launched in August of 2016 and has seen consistent growth every month since that time, being supported by a full commercial infrastructure at AYTU. Beyond Natesto, AYTU is continuing to show sales growth of ProstaScint and Primsol, with ambitions to reclaim historical prescribing rates and to grow ProstaScint through distribution and out-licensing deals outside of the U.S.

For MiOXSYS, AYTU plans to leverage the substantial, growing market opportunity with support from the world’s leading centers in male infertility, with expectations to complete U.S. clinical and regulatory developments, leading to a U.S. product launch in 2017.

Management is strong, and features an experienced and entrepreneurial based management team with proven success in launching and growing specialty pharmaceutical companies. The founding management team, inclusive of Josh and Jarrett Disbrow, grew Arbor Pharmaceuticals from inception to over $127 million in net revenues in less than five years.

The company has over 50 employees, 35 of which are dedicated sales people. After recently completing a cash raise, and with warrants expected to generate additional near term capital, AYTU will be positioned to capitalize on immediate opportunities available to the company. With three FDA-approved products, and a platform that is addressing significant market opportunities, the modest $11 million market cap at the time of this writing appears to be measurably understated.

When all is said and done, gems don’t attract their ultimate value until they are cut and polished. The same standard can be applied to AYTU. The company has four promising products, with Natesto leading the way to drive near term growth and generous revenue opportunities for the company. Once the Natesto machine is in gear, investors can expect those revenues to offer the financial means necessary to generate traction for the other products in the AYTU platform.

To quote the great and prolific entertainer, Rihanna…once the pieces of the entire AYTU platform fall into motion, AYTU may surely “shine bright like a diamond.”

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

While I seek to uncover emerging companies that I feel have true value and potential, it’s important that investors assign an appropriate time horizon to each of their investments, understanding that emerging companies need time to mature.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I am long AYTU.

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Naked Brands Group NAKD Stock News
Naked Brand Group Inc (NASDAQ: NAKD)

Investors who are attracted to emerging companies are not exactly a rare breed, but, for all intents and purposes, they do share some inherent traits that make them somewhat of a renegade spirit in the investment world. Let’s face it, these investors aren’t easily phased by turbulent volatility, are willing to look past transgressions, and for the most part, are willing to undertake a significant risk in order to generate a meaningful reward.

Now, what if there was an emerging story that can offer investors the best of all worlds… a superior management team, a well capitalized balance sheet, and an actual brand that has already established a remarkable footprint worldwide? Would you read that story? If you are not intrigued yet, read on, because investors may soon be treated to witness the process behind the building of a brand, and the real time saga of how an iconic brand like Bendon is going to transform a relatively small company, Naked (NAKD) intimate and innerware apparel, into a national brand capable of defining a new era of the way undergarments are marketed and sold.

Bendon Can Be Naked Too

Some investors are probably already familiar with NAKD apparel, but they may have failed to realize that an investment opportunity was also at hand. Naked is not a new brand of underwear and intimate apparel. In fact, with the label being sold since 2010, they have established a strong and genuine reputation, formalizing engaging relationships with the likes of HSN, Macy’s, Bloomingdale’s, and other major department store chains throughout the United States. But, even well liked and emerging brands, like Naked, eventually need deep pocketed support on their drive toward profitability. And, this is where Bendon plays the critical role in propelling not only NAKD, but their own company as well, perpetuating their iconic name in additional worldwide markets.

Let’s not kid ourselves. While NAKD can deliver additional value and market opportunity to Bendon, the real hero of this story is Bendon, and the proposed deal to merge with Naked Brand Group demonstrates how they can utilize their global company, size, strength and management expertise to bring near term shareholder value to investors that have already bought into the company’s brand story.

Bendon, in its 70 year history, brings enormous opportunity to NAKD shareholders, but Naked Brand Group is contributing some well earned assets as well. For instance, Naked has seen its brand sales grow and has also attracted enormous talent to endorse its men’s line of athleisure wear, with Dwayne Wade serving the endorsement role in the men’s category. And, with Bendon delivering an evergreen partnership agreement with Heidi Klum, the combined marketing power in just the intimate apparel and undergarment segment may continue to prove a lucrative market for Bendon and Naked Brand Group alike. If you are a NAKD shareholder, having an interested partner like Bendon may be equivalent to hitting the jackpot on a one armed bandit.

Let’s be honest, while celebrity endorsements can be bought and paid for on some levels, it doesn’t happen in the case of Klum and Wade. Their endorsements are sincere and powerful, and they deliver a message that both Bendon and Naked brand of underwear and intimate apparel are products worthy of consumer attention. NAKD, for their part, is pioneering a new method of design, using innate features in their line which provides extreme comfort through the use of innovative manufacturing processes, such as “second skin” feeling fabric that is seam free and silver-infused.

Some investors question why Bendon would be so eager to merge with a company like NAKD, whose revenue is less than 2% of Bendon’s trailing twelve months revenue. It’s because Bendon is quick to recognize and seize upon potential. Already enjoying consistent growth, NAKD has engaged in an exclusive partnership for one of its brands with HSN, a premier shopping network that offers a premium showcase for the brand. At the same time, NAKD has positioned the brand to be a specialty garment, allowing for pricing power in an industry where margins have historically been razor thin.

Led by industry veteran Carole Hochman, CEO of Naked Brands, the company has fortified its presence by capitalizing on its management expertise. Banking off of her skill set, NAKD is already positioned to penetrate through the barriers that exist in the apparel industry, barriers that can be prohibitive, especially for companies that are working to develop value through e-commerce and brick and mortar placements. While NAKD, too, has seen its growth hamstrung by small and emerging brands, Bendon offers a competitive advantage by providing NAKD the opportunity to take advantage of the many Bendon distribution channels, allowing the brand a real opportunity for success.

Bendon And The NAKD Truth

The global intimate apparel market is significant, currently being pegged as an $82 billion market. Even more impressive for those keeping score, the already substantial market is expected to grow at a compounded annual growth rate of 17% through the year 2020, keeping the investment opportunity fresh and compelling. Unlike other consumer products, the intimate apparel market has remained relatively strong during economic downturns, in fact, the market even remained stable during the Great Recession. Pockets of growth have been demonstrated for only a small handful of intimate apparel brands, and Bendon has been a worthy inclusion into that select group.

During the past few years, there has been an influx of new and smaller players into the space, facilitated by the relative ease of building a small scale e-commerce site. However, the reality of actually building and maintaining a profitable business strategy beyond the initial launch proves well beyond the reach of most emerging brands, as the customer acquisition costs, lack of an integrated infrastructure, and the barriers in place that can stifle sustainable growth are mostly underestimated by new brands on the block.

Despite the brand and name recognition sometimes enjoyed by small and aspiring brands, in many instances these names only tend to provide a handsome salary to the brand owners, with product sales often unable to provide much of the additional capital required to take a brand beyond the $20 million revenue level.

Without a solid infrastructure and a richly experienced management team in place, the opportunities for growth are minimal, regardless of how well a brand may be received by consumers. In an industry where a single stitching error can cost a company multi-millions of dollars in lost sales and wasted expense, a company that does not launch with a well organized and integrated business plan is often destined to fill the racks at national discount chains. Under Bendon’s tutelage, don’t expect to find NAKD there.

Perhaps Bendon recognized this quality early on in NAKD. Knowing the potential limitations of product and market development for smaller brands, Bendon appears to be taking aim at emerging opportunities to expand its consumer base. For NAKD, by being able to take advantage of Bendon’s significant market position and worldwide distribution platform, the journey forward for investors may prove to be a smooth ride. No doubt, NAKD investors may have hit the jackpot, as a finalized reverse merger will take their investment into a small, 2M revenue company, and facilitate ownership into a much bigger and established worldwide player in Bendon.

Bendon Gets Naked

For NAKD shareholders, the Bendon alliance may be a windfall. Bendon holds a 70 year history deeply rooted in innovation and lifestyle excellence. Its founder is considered a pioneer of modern women’s lingerie, breaking away from styles that included heavy and restrictive corsetry, designing garments that allowed free flow and non-restrictive fits. These innovative features quickly put Bendon on the lingerie map, allowing Australian lingerie to emerge into the competitive arena on the world stage.

Inclusive of Heidi Klum Intimates, Bendon nurtures its own established portfolio of brands, with eight company owned brands and three licensed brands in its stable of intimate apparel and swimwear.

Managing growth, Bendon has a distinguished and experienced executive team, which has built a formidable infrastructure and business operating platform that is conducive to facilitating continuous organic growth as well as the all-important integration of acquisitions.

Bendon’s global distribution and operations platform may turn out to be the perfect fit for NAKD. In January of 2017, NAKD entered into a Letter of Intent with Bendon Limited for a proposed merger of the two companies. Assuming the Merger Agreement is ratified by both boards, the parties expect to seek approval from NAKD shareholders during the first quarter of 2017, subject to SEC review. A merger with Bendon opens the door to tremendous growth and market opportunity for NAKD shareholders and the likelihood of shareholders not endorsing this proposed merger is low. Clearly, the advantages in consummating the deal are a boon for NAKD shareholders, noting that once NAKD is rolled-up, they become part of a much larger and far more powerful company, effectively becoming Bendon.

NAKD Undressed

NAKD is bringing a modest, but consistent record of growth to the table. The company has recorded sales growth in both retail and e-commerce sales, posting a 74% increase in quarter over quarter sales in the third quarter of 2016. Additionally, for the nine months ended October 31, 2016, NAKD’s net sales increased by 38% to $1,292,132, driven primarily by sales expansion into new department stores that include Saks Fifth Avenue, Bloomingdale’s, Chico’s and Dillard’s.

Key partnerships are expected to drive continued growth, utilizing exclusive A-list talent like Dwayne Wade, who will endorse and spearhead their Naked Truth marketing campaign. Taking advantage of Wade’s tremendous social media following, estimated to be in excess of 9 million followers, NAKD capitalized on his social media strengths to launch “Wade x Naked” in October of 2016 at Nordstrom’s, Nordstrom.com, and wearnaked.com. The “Wade x Naked” began generating revenue in the third quarter of 2016.

Investors are anticipating growth in the next financial release, which is expected to show continued traction in all segments of NAKD’s categories.

Bendon Dressed

Bendon, an iconic worldwide brand, is no stranger to delivering impressive financial results. Its global brands include some of the most recognized lingerie brands in Australia, the USA, and the UK. The company has an evergreen partnership in place with Heidi Klum, securing perpetual and mutual benefits, and has maintained focus on its core competencies in the design and development of bras, briefs, swimwear, and sleepwear.

Bendon has demonstrated consistent growth in revenue and earnings, with trailing twelve months revenue (ttm) of $119 million in 2016, and an impressive ttm gross margin of 50.3% of sales. The strong gross margin can be attributed to a host of synergies, but the company’s highly efficient sourcing and logistics network, which provides market agility and economies of scale, acts as the primary bread winner for Bendon.

Bendon’s global footprint has consistently increased over time. The company’s presence is now in 34 countries, with distribution to over 4000 unique customer doors. Additionally, the company benefits from the Omni-channel platform with online, wholesale, and company owned retail and outlet stores peppered throughout its worldwide operations. Sales are generated through a loyal and diverse customer base, with customers ranging in age and social demographic.

Bendon’s brand portfolio is segmented into three categories. The first segment contains its global flagship products,which include Heidi Klum Intimates, Heidi Klum Man, and Heidi Klum Swimwear. These lines secure tremendous online presence through the company’s e-commerce site, and positions the garments as a premium fashion brand for marketing and commercialization purposes. These products offer an accessible price point of between $25 and $99 per item or set.

The company’s “Luxury” segment also enjoys global distribution, with specifically constructed marketing bringing the opulence of the brand to life. Utilizing premium positioning, the Luxury segment sets price points of between $50 and $170 per item or set.

Bendon’s third business segment is its Moderate And Mass category, with the majority of its presence in Australia and New Zealand. For the United States market, Bendon offers its iconic “Fredericks of Hollywood” line of intimate apparel through its online distribution channel. This category provides a dominant heritage market position and sets retail price points between $20 and $69 per item or set.

A Combined Naked Bendon

Bendon will immediately deliver value to NAKD, and NAKD may enjoy expanded revenue and meaningful distribution channels via Bendon. Additionally, Bendon delivers a significant global operations platform, with over 30 production partner facilities across Asia. Company owned distribution centers in New Zealand, the USA, China, and Hong Kong provide outlets to efficiently get products to their respective markets, and with supporting offices in New Zealand, Australia, Hong Kong, the USA, and the UK, logistical issues can be met directly with an executive team that is fluent with each respective market or region.

Dressed For Growth

Already powerful, Bendon can further set the stage to take advantage of significant opportunities generated from the NAKD merger. The merged company expects to initiate an incremental roll-out of additional retail stores across new and existing markets around the globe. Bendon’s distribution channels are anticipated to quickly facilitate an accelerated growth path for NAKD by allowing the efficient global platform to work its magic, expediting brand placement and offering immense logistical support to fuel and manage the projected growth of the NAKD brand.

However, it is not only the business platform that generates the efficiencies. As previously stated, the combined company will take keen advantage of Carole Hochman’s talent, leveraging her expertise to build a compelling sleepwear business, focusing on building organic growth in the company. Additional category launches including resortwear, athleisure, and tween will also be in a position to benefit greatly from Ms. Hochman’s talents.

What may offer the biggest opportunity for the combined business is the fragmented nature of the intimate apparel and swimwear industry globally. The company has been vocal that an acquisitive growth strategy, leveraging the capital market’s platform to consolidate synergistic businesses is critical to its immediate and mid term game plan. In a market that has become highly fragmented due to the relative ease of initial entry, Bendon can utilize its expertise to take advantage of potential roll-up opportunities, and continue to maintain itself in a position to consolidate segments of the industry. In that respect, the company believes that it has identified a potential deal pipeline that can generate in excess of $190 million in incremental revenue opportunity.

While the merged entity will be loaded with extremely valuable and proficient executive talent, an associate described to me the resulting entity to its core, which should cause investors to take an interested and genuine look at the value proposition this deal has to offer.

To paraphrase, he said that if Carole Hochman is placed into a role that allows her to do what she does best, which is building, developing, and acquiring new brands, then there is no limit as to how far Bendon’s acquisitive ambitions can go. Investors should value her involvement, and with the Bendon muscle behind her, the investment opportunities are greatly magnified.

Taking into account all of the positives and accretive synergies to this proposed deal, investors may be well suited in considering an investment into this combined entity. So much so, in fact, that they may even feel eager and excited to join Klum and Wade…and walk around Naked.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

While I seek to uncover emerging companies that I feel have true value and potential, it’s important that investors assign an appropriate time horizon to each of their investments, understanding that emerging companies need time to mature.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I have no position in any stock mentioned, but may initiate a long position in NAKD within the next 72 hours.

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First Choice Healthcare Solutions Inc FCHS Stock News

First Choice Healthcare Solutions Inc (OTCMKTS: FCHS)

To those who believe the medical services industry will survive in its current state, think again. The healthcare system in the United States may not be entirely broken, but it is certainly fractured, bringing dysfunction to almost every corner of the industry, including reimbursements, drug prices and patient satisfaction of services offered.

While focusing on patient factors may play nicely in the current political environment, the legislators and insurance companies that are causing such disruption are failing to recognize the most serious threat facing the medical industry: the fact that doctors are finding it difficult to earn a good living, and many of them are losing their businesses and fortunes because they simply do not know how to navigate through the hurdles associated with running a business. But, to be fair, medical degrees do not include a “buy one, get one free” program, whereby business degrees are bestowed on these professionals out of goodwill.

With that said, things are beginning to change in the industry, and First Choice Healthcare Solutions (FCHS) is proving itself to be the innovator that may change the direction of an entire industry – and it will be a welcome event if they can.

FCHS- Delivering an All-Inclusive Option

Many people will read this article and say that companies like First Choice have been around for years, providing the same services and treatments for patients that FCHS is currently doing. While technically correct in saying that many outpatient clinics offer similar services and procedures, very few, if any, do it as efficiently as FCHS. Perhaps that is the driving force behind the decision of doctors, patients and payers to migrate toward the business and care delivery platform that FCHS offers, providing each of those groups with measurable and improved benefits.

First Choice (FCHS) is a company that is focused on overcoming the abundance of inefficiencies within the industry; and has been building its business platform as a fully integrated, non-physician-owned healthcare delivery platform designed to remedy these issues.

FCHS is a not only a one-stop shop for diagnosis, treatment and recovery, they also act as the single provider for nearly all of the services involved. Patients that have been treated at a competing center find out the nasty truth behind what they thought they would be paying for comprehensive treatment.

A typical routine at a non-First Choice center will allow a patient to generate enough stacks of paper to generate a nice moonlight fire, since each of the components of that visit are essentially independent of each provider’s service. There is a bill for facility fees, a charge for imaging services, a charge for medical procedures, charges for physician services, and charges for just about everything in between and after, including the tissue to dry their eyes after reading the bill.

First Choice is advancing their platform to change the way existing outpatient medical treatment centers do business. For those in the industry that fail to follow suit, many will become obsolete. It’s true in any line of business: either disrupt or be disrupted. And, to those who are willing to compete against a mature FCHS, good luck.

Fully Integrated Platform

The FCHS discussion picks up where I last commented, playing the role of disruptor by providing a fully integrated services platform that is designed to generate multiple revenue streams. FCHS is a provider in the three essential services that patients seek: diagnosis, treatment and recovery.

From the diagnosis side of the equation, FCHS offers physician services, state-of-the-art imaging services and a multi-specialty collaborative care business model. With FCHS bringing nearly all of the essential elements of patient services together, the patient receives a cohesive and efficient manner of service from diagnosis to discharge, with FCHS doctors and specialists providing top notch medical treatment, facilitated by their ability to quickly coordinate treatments to maximize patient benefit and treatment efficiency. FCHS eliminates the need for patients to bounce between a physician’s office and an imaging center, because they have a state-of-the-art center is their office, thus saving them days of unnecessary waiting to complete essential tests.

With dedicated doctors on its payroll, FCHS can quickly advance to the treatment phase of patient services. During the treatment process, patients receive an uncompromising standard of care, ranging from conservative, non-surgical treatment to full scale surgical services – including services offered by its nationally ranked outpatient surgery center. FCHS also offers fully integrated DME (durable medical equipment) services for those patients requiring medically necessary care aids such as wheelchairs, crutches, walkers, braces and other equipment.

Once the treatment is complete, there is no need for the patient to find another facility to complete the required rehab program. First Choice offers physical and occupational therapy services through its state-of-the-art rehab facility on site at First Choice Medical Group. Future expansion plans call for FCHS to open up additional PT/OT centers to provide added travel convenience to its growing patient base in eastern Central Florida.

What Started FCHS Growth

While most people believe the life of a private practice doctor is filled with life’s greatest luxuries, the truth of the matter is that while many of today’s doctors are making a great living, they are not getting uber wealthy. Surgeons may be an exception and certainly have the ability to earn tremendous amounts of money, but those earnings come at a cost: long hours, inefficient billing practices, over-populated staffs, and inconsistent medical reimbursement rates that can wreak havoc in the physician’s business model.

Doctors, for the most part, have been left out of the national healthcare discussion, as the medical and insurance industries continue to evolve into unchartered territory. These practitioners, obviously the most vital component to the entire care delivery process, have been left holding the bag caused by many of the inconsistencies and ambiguities being realized in the current system. Prices for services, treatments, therapies and drug options tend to change by the day and payer, making it virtually impossible for a doctor to concentrate on what he or she does best – providing patient care. Distracting them from patients are the overwhelming administrative burdens that have entwined themselves into private practice, causing doctors to spend more time trying to solve business challenges than they spend on seeing patients. It’s no wonder that FCHS is quickly becoming the option of choice for doctors, specialists, surgeons and medical technicians. FCHS provides each of these professionals with the option to do what they do best, practice medicine and provide specialized medical services – all while providing patients with best in class care and attention.

Doctors are recognizing that the value in teaming with FCHS is more than just a secure and lucrative income. First Choice gives them back their lives, offering a consistent work week, time to enjoy with families and hobbies, and most of all, the ability to lift an enormous amount of weight off their shoulders by not having to operate and manage their own private medical practice. The administrative challenges have become enormous, and as more and more patients are seeking treatment through subsidized healthcare, the trend toward longer hours and increased business complexities will rise.

What Is Fueling FCHS Growth?

While doctors and specialists are acknowledging that the First Choice platform is a better personal option on many levels, they still need to be assured that the drivers are in place to optimize their financial potential.

In the United States, the rising demand for Orthopaedic care is clear. At FCHS, these demands are being met by highly qualified providers who are being brought under the First Choice umbrella of services. These practitioners are able to take advantage of FCHS’s fully integrated ancillary service offerings that enhance patient care, convenience and experience.

We know doctors are smart, but sometimes they still need help to effectively treat a patient’s illness, disability or injury. By joining First Choice, they benefit from a consistent salary with bonus potential, as well as a multi-specialty team of providers to assist them in a coordinated mission to deliver superior, patient-centric care and achieve the best possible outcomes.

FCHS’s future growth will be fueled by several key factors: benefiting from hiring highly qualified talent, introducing bundled payment programs and expanding their care services to include additional comprehensive ancillary offerings. Through its planned bundled payment programs expected to begin being offered later this year, FCHS’ management believes that it will have the ability to leverage all elements of its healthcare platform to deliver potential cost savings in excess of 15% for payers (insurance companies, large self-insured employers and the government) while maintaining the Company’s forecasted margins.

FCHS Flagship Platform

The flagship platform created by FCHS on Florida’s fast growing Space Coast is a testament to the Company’s ability to execute an efficient care delivery model for a community, one that can be replicated anywhere in the country.

Combined, FCHS medical practices, First Choice Medical Group, The B.A.C.K. Center and Crane Creek Surgery Center, represent the Space Coast’s largest Orthopaedic and Spine Medical Centers of Excellence, managing over 100,000 patient visits per year and targeting 5000 surgical procedures annually. With five practice locations across eastern Central Florida, FCHS’ flagship platform includes 23 world class providers, including seven Orthopaedic and Spine surgeons. It is also noteworthy to mention that Crane Creek Surgery Center has been recognized by Becker ASC Review as one of the Top 61 Ambulatory Surgery Centers in the nation.

Specializing in General Orthopaedics, Orthopaedic Surgery, Spine Surgery, Spine Care, Sports Medicine, Neurology and related Interventional Pain Care, the Centers also combine an incredible array of bundled ancillary services in its state-of-the-art facilities, making them truly an innovation in progress. Receiving comprehensive care services from diagnosis to treatment to recovery from one provider is quite complex, but FCHS accomplishes the feat by offering the aforementioned collaborative physician services, physical and occupational therapy, MRI, X-ray and DME services.

First Choice estimates that Brevard County supports upwards of $150 million in total Orthopaedic and Spine care demand, a large portion of which the FCHS centers are working to capture.

Revenue Growth Actual and Forecasted

Historical and projected revenue growth has been impressive. FCHS has maintained a 40% plus compound annual growth rate since 2013, with revenue increasing from $6.51 million in 2013 to over $19.52 million in 2015. Total revenues reported for the first nine months of 2016, ended September 30, 2016, were $22.52 million, which positions the Company well to end the year on very solid financial footing. Looking ahead, management has issued revenue guidance of $40-$45 million in 2017, facilitated by increased surgical and service revenues.

Actual revenue in 2014 was $7.05 million, derived from 1,719 patient surgeries, which delivered an Average Patient Value (APV) of $4,103. (APV is factored by dividing total patient service fees – which is comprised of all medical and ancillary service fees – by the total number of surgeries performed in a given timeframe.)

Surgical procedures increased to 2,060 in 2015, bringing in $17.7 million in total patient revenue. As of September 30, 2016, FCHS had already surpassed 2,045 surgical procedures and realized revenues in excess of $20.7 million with APV rising to $10,133, a 146% increase since 2014. Full year estimates for 2016 are 2700 surgeries and $27.3 million in total patient service fees.

For 2017, FCHS is guiding toward 4000 surgical procedures and total patient revenue of $40.5 million.

Corporate Structure and Management

Trading under the symbol “FCHS,” the Company has approximately 26.2 million shares outstanding, with an estimated float of 18.59 million shares. Insiders currently enjoys a 28.7% ownership stake, comprised of 7.52 million shares of common stock. Institutional ownership sits at 6.9%.

The market cap is approximately $43.37 million after recently closing at $1.65 a share, and has a current EBIDTA of 6.91 (estimated for remainder of 2016). From an options and warrants perspective, if all options and warrants were exercised, FCHS would have total outstanding shares of 31,960,280, and would benefit from an additional $10.8 million in cash from the option and warrant exercises.

The management team has the expertise to deliver on its ambitious plans, with Chris Romandetti, Chairman, President and CEO, leading the way with over 30 years of business development and management experience. He is supported by Kris Jones, VP of Medical Operations, and Timothy Skeldon, CPA, as Chief Financial Officer. The management team is rounded out by Richard Newman, MD and Richard Hynes, MD, both named as Medical Directors of First Choice Medical Group and The B.A.C.K. Center, respectively.

FCHS in 2017

Investors have every reason to expect value creation throughout 2017, as the Company capitalizes on its strong cash position, profitability status and its year-over-year compound annual revenue growth of over 40%. The Company has guided toward increased margin expansion, and continues to build out its world class facilities that are served by an equally impressive team of world class providers. FCHS remains one of the only true fully integrated care delivery providers, and IS the only non-physician owned healthcare delivery platform company that currently trades on the public markets.

On the growth side, investors should look for accelerated numbers of surgeries and the expansion of ancillary services as key growth markers. The platform is replicable in new markets and has the cash on hand, $6.59 million as of September 30, 2016, to finance growth. The Company also has non-dilutive financing options available should management choose to access that line of funding.

From the beginning, I’ve said that companies that fail to disrupt will be disrupted. FCHS is in a prime position to become the innovator in an industry that is searching for a better way to perform services and make a profit at the same time. The market cap of $43 million is curious, and investors should see the current lack of interest as a buying opportunity for shares. The Company has accelerating growth, an innovative business plan, a market that is demanding better services, and a strategy that is addressing many of the dysfunctional elements of the current Healthcare Services industry in the U.S.

While FCHS will require some time to grow, as the momentum continues to build, the Company may be on a path for an appreciated growth spurt, one that can place several new centers into operation and deliver multi-millions of dollars in additional market cap.

Investors seeking opportunities to buy fundamentally strong companies in a sector that is expected to grow sequentially year after year, First Choice should be of immediate consideration. At current share prices ranging in the $1.65 area, FCHS appears to be undervalued related to its peers and has earned consideration for an upward correction.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I am long FCHS and may purchase additional shares within the next 72 hours.

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AmeriCann, Inc. (OTCMKTS: ACAN)

As the legalization of cannabis continues to mature and gain momentum (not just in the U.S., but worldwide) the industry is entering a dynamic new phase of growth and development. As more states adopt legal cannabis a picture of what the industry is going to look like in five years is emerging.

The following trends are now clear:

  • Large-scale energy efficient greenhouse cultivation combined with high tech processing pharmaceutical grade laboratories.
  • More plant science and R & D.
  • Nutraceutical grade cannabis products with multiple smokeless options for the expanding first cannabis user market.
    Far fewer but much larger companies beginning to emerge with plans to dominate the industry.
  • Home, office and assisted living facility delivery of cannabis products will expand the user base and replace the need for many storefront locations.
  • AmeriCann,Inc. (ACAN OTCQX) is a Colorado based publicly traded company that has emerged as the national leader in the design and development of large-scale cannabis projects that will benefit from all these trends.

Informed investors seeking an interesting name in the cannabis stock space for long-term appreciation may want to take a serious look at ACAN. A proven strategy to build wealth is to invest in companies that are involved in super fast-growing industries that provide essential pieces to the industry development process.

This is where ACAN fits in as a company that can achieve tremendous growth in an industry expected to eclipse $20 billion in the year 2020, with additional market growth expected to surpass $45 billion annually (30% larger than the U.S. wine market) within 10 years. This number only represents the cultivation and sales side of the equation. Tens of billions more will be generated with supporting equipment, products and infrastructure.

ACAN management has been aware of this multiple billion dollar overlooked segment of the cannabis industry since 2013, and has been preparing to fully capitalize on this opportunity. In 2014 the company assembled a high profile team, including advisory board) that has developed its Cannopy system for advanced cultivation and processing.

The company does not cultivate, process or distribute cannabis, but provides the specialty facilities and expertise in partnership with local licensees to serve patients in their communities. Company revenue will be derived from the base lease plus an attractive long-term override on revenue created from the plant. Their business model projects a 18-month payback on the CAPEX of one of their facilities and meaningful positive cash flow by early 2018.

More information about the Company is available at: http://americann.co

The company has assembled a portfolio of land suitable for cannabis use and is preparing for development of over 1,000,000 square feet of new cannabis developments. ACAN has to-date invested over $1 million in each of 4 cannabis developments in three states (Colorado, Massachusetts and Illinois) and has plans for aggressive expansion into other states.

As legalized medical cannabis continues to sweep across our nation, state-by-state, the infrastructure required to meet this demand is the area investors should focus on for the exciting possible returns with the lowest risk.

This $45 billion number only represents the cultivation and sales side of the equation. Tens of billions more will be generated with supporting equipment, products and infrastructure. As cannabis markets continue to open and expand, the larger players in cultivation will have the inherent ability to take advantage of mass-market production with lower costs to produce and higher profit margins due to economies of scale. Smaller competitors will likely need to combine their efforts for survival.

ACAN designs and is preparing to develop a whole new generation of advanced, large-scale energy efficient greenhouse medical cannabis facilities to produce the best possible medical cannabis products—in the most efficient pharmaceutical grade laboratories with sustainable environmentally friendly practices.

Investment Highlights

  • Strong management team with a proven track record and over $5 million in personal funds invested in the company.
    Early entrant into cannabis in Colorado-“the Silicon Valley of the cannabis business” in 2013-have investments of $1 million+ in three states.
  • Exciting business model that provides extremely attractive returns on CAPEX and value creation with revenue and meaningful projected cash flow in early 2018.
  • National leader in the strong trend toward large-scale, energy efficient greenhouse cultivation.
    Modest but solid balance sheet with attractive assets and positive cash position.
  • Expertise and technology that AmeriCann has developed is scalable and can be replicated in other states with the same design and team in place.
  • Early mover advantage into and strong footprint in the robust Massachusetts cannabis market.

Marijuana Industry Growth

The legal marijuana industry is emerging in the United States (and globally) at a rapid and accelerating pace. Cannabis prohibitionists are beaten and on the run. A whole new high tech industry is being created. And it will employ thousands and make the world a better place.

Not only have 28 states now adopted legalized cannabis in some form, but 25 nations have also signed up for cannabis, most all within the last two years. GreenWave Advisors expects the retail market to reach $30 billion by 2021, which represents a 5-year CAGR of 35%, and $45 billion annually by 2025.

While the nationwide cannabis industry is waiting for a statement from the Trump administration regarding their policy on cannabis, the industry is proceeding ahead at a fast pace. There is widespread consensus while uncertainty persists about the nature, extent, and timing of universal legalization, change is coming, and investment opportunities in the burgeoning marijuana industry are and will be substantial.

Based on their first hand experience in their own state of Colorado, ACAN management believed Massachusetts would provide the same growth trajectory and in 2014 optioned and designed, and received entitlements on the ideally located 52-acre parcel in Freetown, Massachusetts for one million square feet of cannabis business park. ACAN completed the purchase of the 52-acre site from Boston Beer (SAM-NYSE) for $3,550,000 cash in September 2016.

With the continued assent of the cannabis industry, and especially the voter approval of full adult use recreational in November 2016, this aggressive investment in Massachusetts (in both time and money) has proven to be extremely wise and result in a classic case of “right place, right time”.

If investors were to look at Massachusetts as a case study, it demonstrates ACAN positioned itself as a leader in cultivation and processing there. In Massachusetts alone, cannabis related revenues are now forecasted at over $1 billion annually by 2021 to a continuously larger consumer base. The Massachusetts market will be extremely robust for the next several years and ACAN has a very strong position.

Massachusetts Market

The MMCC project represents a significant development that is projected to create revenue and positive cash flow to AmeriCann by 2017 with dramatic increases in future years as the project expands. The MMCC project has been designed to become the largest and most technologically and environmentally advanced cannabis cultivation facility in the nation. AmeriCann believes it will set the standard for quality product and energy efficiency in future cannabis infrastructure worldwide.

ACAN’s MMCC flagship project will set the standard for the cannabis industry of the future-blending biotech and agritech to create the most consistent, highest quality cannabis products in the industry, with the least environmental impact possible. Upon build out the plant will employ an estimated 300 workers with green, good paying jobs.

In Massachusetts, ACAN recently engaged Campanelli Construction, one of the most respected commercial developers and builders in the northeast, to build its Massachusetts Medical Cannabis Center (MMCC), on 52-acres in a business park 47 miles from Boston, Massachusetts. (Campanelli has committed to moving into other states with ACAN to replicate their advanced MMCC model.)

ACAN is now finalizing working drawings ready for bidding and preparing for a groundbreaking for the first phase of the development, a 30,000 square foot greenhouse cultivation center, infused processing laboratory, and cannabis research and development center capable of producing $30,000,000 in annual revenue to the licensee when completed and operating.

MASSACHUSETTS MEDICAL CANNABIS CENTER (MMCC): RENDERING

ACAN Facility

The first phase alone is projected to provide a very attractive return to AmeriCann from lease payments and more importantly from a percent of revenue from the facilities.

Based on this time schedule it is not unreasonable to believe that ACAN could experience its first meaningful revenue and earnings in early 2018. As the MMCC project is expanded, the cash flow to the company is expected to increase proportionally.

Plans are to break ground on the first phase in the first quarter of 2017 with first cannabis sales in early 2018. The company is highly confident it can arrange the financing needed to complete the first phase and will add additional greenhouses as the robust Massachusetts cannabis market expands.

Thus, ACAN, with a large footprint ready to build, has the opportunity to provide the cultivation facilities at MMCC that will produce a large percent the cannabis that will be required for fast developing Massachusetts market over the next two to three years.

AmeriCann And The $45 Billion Market

While most investors believe that the growth in the cannabis market will continue into the next decade, many are ignoring one of the most critical questions of how all of this cannabis is going to be cultivated. Having the real estate and facilities to grow premium cannabis is the most important part of the process.

If the market is going to grow into that $45 billion revenue estimation, an infrastructure of immense proportion– with estimated costs of $27 billion– needs to be put in place to meet the cultivation demand.

ACAN is going to be the early winner in this market, as they have already established their large footprint in Massachusetts, perhaps the most attractive market for demand of new cultivation in the industry, and have land in two other states with eyes on several more.

AmeriCann is one of only a very few cannabis companies in the nation that has positioned itself to benefit from the coming insatiable demand for infrastructure in the industry and the decision appears to have been a very good one that will likely provide exceptional returns for shareholders for years to come.

ACAN is focused on purchasing land and getting it designed and entitled for developing the complex and expensive high tech real estate properties that will be needed to support and contribute to the cultivation, processing and distribution of marijuana products.

As legalized medical cannabis continues to sweep across our nation, state-by-state, the infrastructure required to meet this demand is the area investors should focus on for the exciting possible returns with the lowest risk.

The massive infrastructure needs will be spread across the nation over the next two years, with 28 states (and surprisingly 25 other countries) now allowing legalized medical or recreational cannabis.

And a slate of additional states that are working through legislation efforts to allow both medical and recreational use, adding to the eight states already approved for recreational use. Bolstered by voter sentiment, with some polls showing that 89% of U.S. voters support medical marijuana and roughly 54% supporting the legalization for adult use, it becomes more obvious that ACAN is in a very enviable position.

Strong Management Team and Advisory Board

The ACAN management team is solid, with extensive experience in developing both public and private companies, from inside and outside of the cannabis industry. President and CEO Tim Keogh has experience in real estate development, having led marina projects in Florida and has specific cannabis experience in Massachusetts, having been the managing partner of a group that was awarded one of the coveted Massachusetts medical licenses. He has become a respected and well-known leader in the national cannabis scene.

Ben Barton, a successful venture capitalist, and Founder and CFO of ACAN, brings extensive experience from his co-founding of Synergy Resources (NYSE: SYRG), an oil and gas land company that has successfully achieved a market valuation of over $1 billion and is traded on the NYSE. SYRG investors realized a 10x return. Mr. Barton has directly invested over $5 million into the building of AmeriCann.

The ACAN highly respectable advisory board (three Ph.D.’s and one MD) includes horticulture and medical advisers, a cannabis genetics and breeding specialist, an extraction and infused product specialist, and a licensing and compliance adviser to compliment the strong business side of the team. This management and advisory team is in place and was largely responsible for the CANNOPY cultivation system ACAN is using for their MMCC project.

The management team is environmentally aware and ACAN has become the only public cannabis company that has achieved the coveted B Corp certification-given to those companies that demonstrate corporate and social responsibility and environmental excellence.

ACAN’s New SOLANNA line of advanced cannabis infused products

As infused cannabis products have become an integral part of the emerging cannabis industry AmeriCann has created “SOLANNA”, a new proprietary comprehensive line of nutraceutical-grade cannabis infused products. The line of products will be put into final development at their MMCC first phase R & D facility. AmeriCann will license the intellectual property and formulas for SOLANNA to tenants of their facilities and will focus on providing a large selection of healthier smokeless alternatives that include:

  • Capsules,
  • Topical lotions and balms,
  • Sublingual tinctures,
  • Oral dissolving film,
  • Trans-dermal applications
  • Oil cartridges for vaporizing.

These proprietary ACAN SOLANNA products are designed for pain, calm, and sleep.

The Company plans to expand the SOLANNA product line to include edible products, health drinks, and branded concentrates. The products are designed to allow consumers to manage dosage through micro dosing and to improve efficacy by incorporating blends of other plants, essential oils and other supplements that enhance and compliment the benefits of cannabis.

More new and discriminating cannabis consumers seek quality, consistency and value for all products. The need for a brand that instills confidence and reliability for consumers is even more important for the emerging cannabis industry. As more patients and consumers are introduced to cannabis for the first time, the availability of a trusted brand is particularly important.

The plan is to make SOLANNA an iconic national brand of premium cannabis based products produced in each state where ACAN has a cannabis facility. The SOLANNA line expands the value of the ACAN business model by creating a valuable line of superior infused products upon which they will likely have significant long-term revenue to ACAN from overrides.

Massachusetts Market Potential

The Massachusetts cannabis market is widely considered to be one of the most attractive in the nation for a number of reasons:

1. Large, highly educated population of 6.7 million.

2. Full vertical integration- seed to sale.

3. Limited number of cannabis license holders.

4. Lowest tax on cannabis in the nation (6.5% plus 3.75 % excise).

5. Delivery to homes and assisted living facilities allowed.

6. Consumption at approved locations.

Currently, the state is reporting an existing medical cannabis patient population of 37,000 people, and that number is expected to surpass 125,000 within the next ten years. The problem is that that Massachusetts simply does not have enough cultivation infrastructures to support the needs of its medical patients.

Add to that the implementation of recreational cannabis in January 2018 and it becomes apparent there will have to be millions of square feet of cannabis cultivation space built and it will need to be largely greenhouses.

In the designing and processing of the giant MMCC project, ACAN was meticulous in maintaining regulatory compliance and good will with city and state officials by receiving site plan approval, host community agreements, storm water, wetland studies and environmental permits, traffic impact and access studies, and civil engineering assessments.

What Can Propel ACAN?

ACAN investors have a lot to look forward to, capitalizing on the increased momentum of legalization. The industry is highly fragmented with several leaders beginning to emerge. It appears ACAN will be one of the national leaders.
While the current position in Massachusetts is important to ACAN in building value in, the company is in a prime position to accelerate its growth by taking advantage of its management strength and design and development team.

The company management believes there are as many as 8 states that it considers prime for the MMCC prototype.
With its multi-market strategy and national expansion already underway, ACAN is primed to replicate in other states what they are currently preparing to build in Massachusetts. With the knowledge gained from this and their other projects, ACAN certainly has the potential to become a dominant and efficient builder of cannabis infrastructure projects as they enter into markets in Florida, California, Nevada, and Maryland.

Capitalization and ACAN Stock Trading

The capital structure at ACAN is also a contributing benefit to investors. The ACAN management team is stock market experienced and has structured the company with a tight capitalization (with no cheap options or toxic convertible notes like many cannabis companies).

The company has only slightly over 20 million shares outstanding, with 62% of those shares being tightly held by insiders. Additionally, interest in the company has expanded significantly recently and ACAN trades on the OTCQX (highest OTC market below NASDAQ) with some liquidity, averaging over 85,000 shares in trading volume per day, 10x the trading volume in 2016, and currently sports a market cap of approximately $80 million. Trading at just over $4.00 per share, the stock is well off of its lows for the year and is currently trading at a near 52-week high. Institutional ownership and interest is small but growing.

Based on numerous U.S and Canadian cannabis stocks that have valuations of from $200 million to over $1 billion, a major increase in the ACAN market cap appears to be reasonable and the ACAN stock offers potential for significant increases over the rest or 2017 and into 2018.

Canopy Growth (CGC.TO) at $9.85 has a $1.2 billion market cap with just $24 million in annual revenue. Aurora Cannabis (ACBFF) at $2.00 has a $500 million market cap with just $3 million in annual revenue.

ACAN In 2017

An investment into a company like ACAN has the very real potential to deliver long term value by not only allowing investors to take advantage of the explosive near term growth of the cannabis industry, but also by taking a position in a company that will likely be an essential part of the industry for many years to come.

With the groundbreaking of the large scale MMCC project scheduled in the first quarter 2017, expected cash flow and earnings by early 2018, replication of the Massachusetts model in other states and a possible up listing to the NYSE or NASDAQ market, plus likely greatly increased publicity and market awareness, ACAN could have a very interesting 2017.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I have no position in any stock mentioned, but may initiate a long position in ACAN within the next 72 hours.

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Cellectar Biosciences Inc CLRB Stock News

Cellectar Biosciences Inc (NASDAQ: CLRB)

Cellectar Biosciences is a Madison, WI based oncology company that is generating a tremendous amount of industry interest, with an increasing amount of attention being placed on the company’s Phosphopipid Drug Conjugate (PDC), a proprietary platform that enables delivery of diverse oncologic payloads through its phospholipid ether cancer-targeting vehicle. Importantly, not only does CLRB’s unique PDC platform provide a targeted therapeutic treatment, it also increases the therapeutic payload of the drug directly to cancer cells, which enhances effectiveness and reduces drug exposure to healthy cells, potentially reducing adverse events. These technological advantages within the company’s PDC platform may act as the “secret sauce” that can open tremendous opportunity for both the company and its investors.

Since first writing about CLRB, investors have pinged me on several occasions, asking for a review of the most recent phase I data of their Multiple Myeloma drug, CLR 131, and to provide some analysis as to where I believe the already impressive data may ultimately lead. But, if I were to do so, and not include the opinion that the PDC technology generating these impressive results was the most seducing part of the Cellectar Biosciences equation, I would be selling the investment world short. And short, by the way, is not a position that I would currently recommend in regard to CLRB stock ownership.

PDC, It’s Better Than A Basket Of Wings

With many investors wanting to skip through the appetizers and get straight to the meat and potatoes of an investment thesis, let me offer them this, which should build them with enough confidence to allow themselves to grasp a full appreciation of the absolute potential behind those results. Here it is, impatient friends: CLRB is providing striking results in treating both relapsed or refractory multiple myeloma, combined with a safety and tolerability profile that is extremely encouraging when compared to current standards of care. The overall survival rate and patient tolerability results already demonstrated with single, lower dose treatments, may ultimately put CLR 131 toward the top of the efficacy list.

With the essential basics out of the way, it’s time to dig deep into this PDC platform that Cellectar Biosciences is developing. It’s a crucial component to what they are doing, and while the PDC platform is currently being used to generate some mouthwatering results in its current clinical trials, the applications to which it can be applied are much broader than treating multiple myeloma, although such an accomplishment will be a great way to put an exclamation point on its proof of concept.

CLRB And Strategy

Cellectar is deep into the process of providing proof of concept for its PDC platform, continuing its CLR-131 franchise, and advancing early stage development chemotherapeutic conjugates so that when applied through the PDC process, they can achieve significantly higher therapeutic benefit to patients.

Unlocking the power that is exuding from the platform is the key, because once established as a breakthrough technology, its use in delivering a targeted therapeutic dose of treatment will be applicable through a wide range of cancer-targeting therapies. This is the “protein” within the company, and like all good high protein meals, it could make CLRB extremely strong.

The basis for the PDC delivery platform is to deliver a phospholipid ether cancer targeting vehicle, exploiting selective cancer and cancer stem cells, allowing for the uptake and prolonged retention in malignant cells. By being able to attach to a diverse set of oncologic payloads, the PDC platform may prove to have the ability to treat a broad range of cancer indications.

While I want you to take my word as to the platforms merit, it’s worthy to acknowledge the two peer reviewed publications that offered extensive research and scientific validation of PDC. In an article published by Nature Reviews Clinical Oncology titled, “Beyond The Margins: Real Time Detection of Cancer Using Targeted Fluorophores”, the review team evaluated the current use of fluorescent molecules in cancer diagnostics, as well as the fluorescence-guided surgical resection of tumors. The paper focused on the need for the use of targeted delivery of molecules to malignant tissue. The peer reviewed data in both reports was consistent in several conclusions, but one clearly stands out to benefit CLRB: both journals provided insight, review and validation of the unique potential and varied utility of Cellectar’s PDC platform. And, with this validation comes the increased likelihood of partnership and licensing opportunities as the company continues to mature the pipeline.

What Are PDC’s?

Okay, so some of the hard part is done, but not all of it. Many still don’t understand what the PDC platform is, and why it could be such a huge asset to CLRB in both the near and long term.

To break it down in simplest terms, the company’s product candidates are built upon its patented cancer cell-targeting and retention platform of optimized phospholipid ether-drug conjugates (PDC’s). The company was deliberate in designing its phospholipid ether carrier platform to be coupled with a variety of cancer fighting payloads, and to be both therapeutic and diagnostic in function.

The PDC pipeline includes promising product candidates for cancer therapy and cancer diagnostic testing, highlighted by its lead therapeutic agent, CLR131, which is currently being evaluated under an orphan drug designated Phase I clinical study in patients with relapsed or refractory multiple myeloma. In addition to that study, CLRB is planning to initiate a Phase II clinical study in the first quarter of 2017 to assess efficacy in a range of B-cell malignancies. To reach deeper into the 2017 initiatives, Cellectar Biosciences is further planning to develop PDC’s for targeted delivery of chemotherapeutics, advance its existing collaboration with Pierre Fabre and to expand its PDC pipeline through both in-house and collaborative efforts.

Basically, it’s as simple as this: CLRB can take a phospholipid ether, add a linking molecule, attach the specified drug to be delivered, and it becomes a PDC with the ability to deliver a fortified and targeted payload using fluorophores, radioisotopes, chemotherapeutic agents and potentially other classes of molecules.

Some have compared the PDC platform to ADC targeting and delivery, but the benefits of PDC still stand clear. The PDC’s method of delivery is through the cell cytoplasm and has no immunogenic properties, compared to ADC, which targets the cell surface and holds potential immunogenic qualities. This differentiating feature allows Cellectar Biosciences’ platform to exploit an unalterable metabolic pathway.

In fact, beyond those two measures, PDC offers a host of additional benefits by using its small molecule approach. The CLRB platform offers direct cancer targeting, cancer stem cell targeting, metastases targeting, ability to overcome resistance, and a solid safety profile. Additionally, PDC delivers a cytoplasm payload delivery that brings payload diversity, linking options, and a far easier method for manufacturing, improving cost efficiencies. The company is clearly fulfilling its mission step by step by using its PDC platform to represent a new class of cancer targeting and payload delivery system, one that is clearly demonstrating its benefit.

OK, Now The Science

While the company posseses a number of product assets, focusing in on its most advanced trial will work to demonstrate the potential throughout the entire pipeline. Remember, while the payload being delivered is certainly an integral part of the therapeutic process, it’s the platform that drives the results.

In addressing multiple myeloma, CLRB is demonstrating what many industry insiders consider to be toward the top of the class in terms of efficacy and safety with a single drug dose. In its Phase I trial targeting both relapsed and refractory multiple myeloma, CLR 131 demonstrated its targeted and precision radiotherapeutic value, along with the platform’s novel execution of action. Additionally, during its Phase 1 maximum dose study, CLR 131 provided early signs of both efficacy and patient tolerability.

CLR 131 demonstrated significant improvement from Cohort 1 to Cohort 2, with a progression free survival rate increase of 43%. Additionally, there were less adverse events at higher doses, and the average grade of adverse events overall increased only slightly. But, to be clear, even though there was a slight uptick in average grade of adverse events, these reported issues were not considered materially severe or unexpected.

The Phase II trial will initiate in the first quarter of 2017, advancing the development of the r/r multiple myeloma therapy and further expanding into other hematologic malignancies. Importantly, patients may receive two 25.0 mCi doses of CLR 131, at baseline and between day 75 – 180. Only one dose is being delivered in the Phase 1.

The decision to advance the CLR 131 trial is due to the benefits associated with delivering a potential best in class therapy. The current trial has demonstrated overall clinical success, and CLR 131 holds the potential to be used in combination with approved therapies and , in a multi-dose schedule to further improve performance.

Impressive Phase I Results

The Phase I trial was a multi-center, open label, dose escalation study initiated in the second quarter of 2015. The primary objective was to characterize safety and tolerability, with secondary objectives designed to establish a dosing regimen and to assess therapeutic activity. The study began with a single 12.5 mCi dose in Cohort 1 and progressed past 18.75 mCi to a single 25.0 mCi dose in Cohort 3, which represents a 100% increase in drug dose and potential therapeutic value from Cohort 1.

The participating patients’ had an average age of 68, 4 prior lines of treatment, including the latest approved drugs and 50% had also undergone stem cell transplant procedures representing a difficult to treat patient population. Theses demographics remained consistent through the initial two cohorts, which will serve to validate the consistency in the trial design and results.

Patient Overall Survival performance, likely the biggest factor in getting this therapy to market, was exceedingly impressive. As of 11-22-16, median overall survival in Cohort 1 was 11.9 months and Cohort 2 was already at 4.9 months. It’s important to note that all 8 evaluable patients from the first 2 cohorts are still alive and the overall survival duration continues to increase.

Equally impressive is the PFS. Patients receiving the 12.5 mCi Cohort 1 dose achieved 89 days of PFS and Cohort 2 patient PFS increased by 43% to 127 days.

Comparing Overall Survival Performance

Investors want to see the side by sides, especially when they are being exposed to a company that
may be laying claim to becoming best in class for therapeutic value. For the drugs most recently approved to treat multiple myeloma – Carfilzomib, Pomalidomide and Daratumumab, the mOS was 11.9, 11.9 and 18.6 months respectively.

Compare this to the CLRB’s CLR 131, whose Cohort 1, low dose results already surpasses two of the recently approved drugs, and is rapidly closing in on the third. The CLRB data listed is as of 11-22-16 and is increasing as all patients continuing to survive.

Progression Free Survival, which may be a marker for Overall Survival, has already cleared 127 days in cohort 2, and represents at least a 43% increase from cohort 1.

Overall survival is key, but the FDA looks at a host of additional factors prior to approval of a drug, and thankfully, I like the company’s chances even greater in this category. We know that the treatment is at least as equally effective to date, but how is the drug tolerated by patients?

The answer is simple. Strikingly well.

CLR 131 has a positive safety profile through 2 cohorts as well as an overall data set of 28 patients. Within the profile, there are no neuropathies, no nephrotoxicity and no cardiotoxicities. Additionally, CLR 131 has demonstrated no GI toxicities and no deep vein thrombosis. The therapy’s most common adverse events are hematological in nature.

Importantly, CLRB plans to provide cohort 3 results and PFS and mOS updates for cohort 1 and 2 in the first half of 2017.

CLRB Potential

Even with additional chapters still being written, the CLRB story is shaping up to be a tremendous value to investors who gauge the probability for imminent success. CLRB will be addressing a significant market upon treatment approval. There are approximately 90,000 multiple myeloma cases diagnosed per year in the U.S., with a potential market estimated to eclipse $22.4 billion in 2023. That is an estimated increase of 151% increase in global market opportunity within the next 10 years.

The benefits of an approved CLR131 extend to both patient and provider, with CLR 131 being considerably more cost effective, and allowing a patient to receive as little as one dose to achieve targeted results.

CLRB is in a strong position to capitalize on their momentum, with approximately $13.9 million on hand, as well as a fully diluted capitalization picture of only 22.6 million shares on a fully diluted basis. Currently, CLRB has roughly 11.5 million shares outstanding, with additional warrants and preferred stock options making up the difference. But, if investors exercise those options, it brings capital into the business, and while the company is financially stable at the moment, having arrows in the quiver to attract additional funding will provide security for investors.

Those who follow CNA Finance understand that we hold tremendous interest in finding emerging companies that may offer transformative and curative treatments in both the service and medical industries. While Cellectar does need a bit more time to generate its final phase 2 data, the results from the phase I trial are both compelling and remarkable from a therapeutic standpoint. With the stock trading at roughly $2.00 per share, investors may be facing down an opportunity to catch a rising star still in its intermediate development phase. Recall that Cellator, upon its buyout from Jazz Pharmaceuticals, went from $1.60 to over $30.00 in a matter of three months,based on an overall survival rate increase of slightly over 3 months. CLRB is in a similar position, whereby they are rapidly closing in on survival data that may serve to be equally, if not more, impressive. With a low share structure, combined with a solid balance sheet and extremely promising trial data in hand, the company possesses the right ingredients for investor consideration and action.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I have no position in any stock mentioned, but may initiate a long position in CLRB within the next 72 hours.

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Thought Leader Discussions

Gevo, Inc. GEVO Stock News

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Gevo, Inc. (NASDAQ: GEVO) Before we get into this interview, I'd like to extend a special thanks to my friend Joey who both set up the...