Minerco Inc (MINE)

[312Moneyball]

DD regarding: Production Runs; Refinancing; Marketing Strategy; and Product Development

So it has come to my attention that many of us are very anxious to understand the significance of the loan agreement established with Post Oak LLC, as well as it's correlation to recent events. Before any speculation of this financing vehicle, one should take a trip down memory lane and consider where Minerco Resources Inc. truly began their long-term growth strategy in this beverage industry...

So let us go back; back to July of 2013. If we take a look at the "Distribution Agreement" filed during this time, we can better understand the procedures & logistics that are legally required from the company:

1. Term:

A. Subject to earlier termination in accordance with Paragraph 9 of this Agreement, the term of this Agreement shall be for a three (3) year period commencing as of the Effective Date. Subject to the terms and conditions herein, upon the expiration of the initial term, the term of this Agreement shall automatically be renewed for successive one (1) year periods.

- To the best of my knowledge, there has not been a "Termination of Agreement" filed. Please correct me if I am wrong, but I have scoured and it seems as though this stipulation is still in effect.

2. Supply of Products:

A. Supplier will supply to the Distributor such quantities of the Products as shall be required by the Distributor to perform the conditions of this Agreement and the same shall be shipped on order from the Distributor subject to and consistent with the production schedules of Supplier. During any time in which demand exceeds supply of the Products, Supplier may restrict the availability of the Products to Distributor in accordance with a commercially reasonable equitable allocation program specified by Supplier.


- This is key in understanding the recent financing agreement in relation to our products supplied by Level5. Everyone is mentioning how the products on Amazon are gone, and those that were in stores are now running low...Well duh! If you were here in January, you would have seen the COUNTLESS pictures of investors and customers enjoying our beverages, but we did only execute an initial production run. We have to consider that roughly 10,000 products were made since September of 2013. This reflects their previous initiatives in developing customer awareness.

Specialty Beverage Business:

In September, 2012, we commenced operations of Level 5 Beverage Company, Inc. (“Level 5”), a functional specialty beverage retailer, to develop, brand and sell a line of functional beverage products. The LEVEL 5™ product line is a portfolio of highly functional, all-natural, reduced calorie 2.5 oz. “shots.” Level 5 currently has developed five products, RISE™, COFFEE BOOST™ ,CURVES, ARMOR and FLEX , two of which (RISE™ and COFFEE BOOST™), are available for sale in over 250 stores in Southern California and Arizona and are also available for sale via the internet on Amazon.com.

The LEVEL 5™ product line features eight (8) distinct varieties, each with a unique flavor profile aimed at addressing a specific targeted result. LEVEL 5™ is positioned as a lifestyle brand, with a delicious and convenient easy-to-drink shot format. The LEVEL 5™ product line features five (5) distinct varieties, each with a unique flavor profile aimed at addressing a specific targeted result: (diet and weight loss, wellness and energy). RISE™ and COFFEE BOOST™ are part of our energy line. CURVES falls under the woman’s health and weight loss category, FLEX is a workout supplement and ARMOR is a wellness product that is a blend of herbs, minerals and vitamins.

? RISETM (Energy Supplement)

? COFFEE BOOSTTM (Energy Supplement)

? CURVES (Women’s Supplement)

? ARMOR (Immunity Supplement)

? FLEX (Workout Supplement)

We first placed our LEVEL 5™ products, RISE™ and COFFEE BOOST™, in retail stores on September 16, 2013. As of January 31, 2014, Level 5 has retail listings of over 250 stores and online listing through Amazon.com. To date, Level 5 has depleted 784 cases (9,408 individual bottles) of LEVEL 5™ products.

- Do the math; 9408 units/7 (Months following production: October-May) = 1,344 products purchased per month, or 336 products per week! Also, let us consider that most sales didn't really start occurring until 2014. For those of you who aren't familiar with forecasting demand, to see this level of sales occur in just 2 quarters is very promising for any company looking to position itself for long-term growth (1-3 years). IMHO, these statistics reflect positive market reactions to our entry within the beverage industry this year so far.

Source: http://ih.advfn.com/p.php?pid=nmona&article=61581964

3. Marketing Plan:

A. Simultaneously with the execution hereof, and thereafter not later than June 15th and December 15th, respectively, of each year during the term of this Agreement (or more frequently as agreed by the parties), Supplier shall deliver to Distributor a reasonably detailed Product sales and marketing plan for the following six (6) months, which shall include, without limitation, proposed marketing budgets and plans (including proposed Product spokespersons, participation in trade events, etc.) and sales forecasts (the “Marketing Plan”). Not later than July 15th and January 1st of each year during the term of this Agreement, Supplier shall deliver to Distributor a reasonably detailed report of the results of Supplier's Product sales and marketing activities for the prior six (6) month period, which shall identify all sales and marketing projections that were established for such period and a reasonably detailed explanation of whether such projections were satisfied or achieved.

- Personally, the excerpt that is in bold tells me we can expect a PR of sorts that will specifically outline their marketing initiatives. If we take a close look at the conference call, we can see that they mentioned several items worth noting at this time:

i. Celebrity sponsorship -

"We're also currently in negotiation with CAA, that's Creative Artists Agency; it's the largest talent agency in the world, to secure one of the top celebrities on the planet. I can't tell you who it is, but let's just say that they have the most online following of all celebrities, and we are currently in negotiation on terms on a deal to that effect."

ii. The Herbal Collection -

"On March 2, 2014, Level 5 applied for, and expects to receive, the trademark: The Herbal Collection (“THC”). With this new brand and trademark, Level 5 is strategically positioning itself to build on its already impressive portfolio of all-natural beverage products. Our plan is to incorporate THC Brand into our portfolio, both horizontally and vertically.

Management views the growth of the THC brand is twofold:
1) by tactically developing “product” in house while...
2) strategically evaluating business relationships such as partnerships and Joint Ventures with other established companies in targeted, vertical markets.

Level 5 is currently in late stage discussions with a private company, based in Denver, Colorado, to combine our respective expertise into a single venture. This private company enjoys a large presence and established contacts in the industry and has approximately ten products in advanced development in all the vertical markets we have identified."

iii. Reformulated/redeveloped products (VitaminFIZZ & COFFEE BOOST) -

"The Coffee Boost, which we feel is extremely promising, can be paired with another brand we're in negotiation with right now. It's a brand that Nestlé is currently testing, and WhiteWave, which is a part of Dean Foods—it's a $2 billion division of Dean Foods, Silk soy milk, and International Delight coffee creamers—they're busy testing one of the derivatives of Coffee Boost, its intellectual property we've acquired from a third party, which would be a breakthrough in the coffee creamer industry.

...VitaminFizz has been the standout for the last decade. In the last 10 years, since we've started developing beverages and have now, as I've said, developed over 600 brands and reviewed somewhere in the region of 5,000 products, VitaminFizz by a long stretch is the standout brand with—so far the testing has shown more consumer feedback on the favorable side than any other brand we've ever tested; the same reaction from the manufacturers and from the distributors. For this reason, I've been able to align our Company with some of the biggest CEOs and beverage companies in America to help launch this new breakthrough product.

The VitaminFizz launch coincides with the unprecedented growth in the Sparkling ICE brand. It's a brand of sparkling—low-calorie sparkling beverage which has grown from $10 million to—we believe it might reach a half a billion dollars this year, but it's over $300 million after two years of growth. Obviously, this is all on the Internet, for anyone that's interested in researching it. We feel our product delivers better flavor. The packaging is—you can't even compare the packaging. Our packaging, which will be introduced to the public within the next few weeks, is on a whole different level to their packaging. Then to top that off, which I'll discuss in a few minutes, we've aligned ourselves with some of the largest distribution systems in America to bring the product to the market.

We have strategic partnerships with Big Red, which is in the top 10 largest beverage companies in America. ...

They're taking an ownership interest in the Company, and we're fortunate enough to align ourselves with Dan Ginsberg. Dan was the former CEO of Red Bull North America. Dan helped grow what some consider to be the most important brand in beverage, and some say the most important brand in the world, across all categories in the last 25 years. Red Bull changed the way consumers drink beverages. It changed the price point, changed the whole way that beverage companies market beverage, and Dan was responsible for more of the growth of Red Bull in North America than any other CEO since or before him. He was the CEO for six years. Prior to that, Dan was the CEO of—oh sorry, the Chief Marketing Officer of Hardee's, which is a $2 billion fast food company. He was brought in to restructure the company. "

Now this is a lot to take in at once I understand...but let's move on to the core of this post, the $2,000,000 in secured financing....

First off, don't forget that prior to the arrangement of this financing, MINE had restructured its current lenders and paid off SEVERAL notes and reissued hundreds of millions of shares at the time.

From the PR dated 05/07/2014:

"Note Holder and Lender Meeting(s)
Starting last week and continuing for the next few weeks, the Company has been and will be engaging all of our Note holders and lenders in private discussions concerning the tremendous opportunities, partnerships and challenges in front of Minerco and Level 5. We want to give all of our Lenders the opportunity to be equitable partners with Minerco and Level 5; however, Lenders unwilling to provide updated and/or equitable terms will be considered unfriendly. Minerco will finally have decisive control of our financings and is in a premier position to choose our Lenders (rather than Lenders choosing Minerco)."

http://ih.advfn.com/p.php?pid=nmona&article=61771094
http://ih.advfn.com/p.php?pid=nmona&article=61786918
http://ih.advfn.com/p.php?pid=nmona&article=61804107
http://ih.advfn.com/p.php?pid=nmona&article=61852010
http://ih.advfn.com/p.php?pid=nmona&article=61855427

Finally, let's take a look at that loan agreement...

This traditional $2,000,000 Credit Line with Post Oak, LLC will allow us to fund our operations for the foreseeable future. This credit facility allows us to draw down on the Credit Line on demand and leaves us in control of our financial future. Additionally, the Credit Line does not require an interest or principal payment for 12 months to allow us to establish significant sales and revenues before the first interest payment is due.

The upcoming bi-coastal launch of VitaminFIZZ® and expansion of COFFEE BOOST™ will be the first use of proceeds. The Herbal Collection will also be further funded with the initial drawdown from the credit facility. The flexibility Minerco and Level 5 gain from this credit facility will further help us to responsibly manage our upcoming growth and expansion. This flexibility will allow the Company to grow / expand multiple brands, streamline operations and realize revenues, simultaneously.

Source: http://ih.advfn.com/p.php?pid=nmona&article=62108180

And to accommodate the lender in their advances made forth to Minerco Resources Inc., the company issued the following:

Security. As security for the Line of Credit, immediately upon the first Advance made by Lender to Company, Company shall cause and/or direct Preferred Class “C” Shares of Minerco Resources, Inc. (“MINE”) to be issued to Lender. The amount of shares shall be sufficient to provide adequate security to the Lender for any Advances made to Company, and shall be reasonably determined by the parties at a later date. Company shall contact its transfer agent Island Stock Transfer to initiate this issuance, with all proper corporate approvals.

This agreement will tie the lender to the financial success MINE. Now if we also take into consideration the objectives and plans outlined previously, we can see how these recent events are correlated. It is my personal belief that MINE is currently developing its intermediate marketing activities to promote their newly branded products after a SECOND production run underway. The main reason for their delay in the production run was to establish an alternative financing vehicle that would trust their initiatives despite their lack of revenue.

We are on the OTC people...so ya, we have a stockholders deficit. To be real, you won't find many companies in this arena that don't. Truthfully, you should be confident that the management here has been so forthright in updating investors. Prior to the last CC, the company created an official twitter page to funnel the questions and concerns of investors - @MinercoRes.

I'm not posting on this board to convince anyone of ANYTHING. All I care about is that honest and credible info is being circulated here. Take this post for what you will, but come June, I think everyone can expect a flood of company announcements that will validate all of the items listed here.

GLTA. Cheers.