Tuesday, September 01, 2015 5:01:19 PM
Operating capital or shortage thereof is still a huge concern. The new LOC is highly restrictive and covers Inventory only. All company assets are pledged as collateral.
Shrinking sales is another huge variable. Actual sales have declined 7% comparing first half of 2015 over 2014 in spite of dozens of new product launches including two new categories, energy drink for one quarter and protein bars for several quarters now. Competition has gotten tougher. Even upstart Jym has 8 products on the bb best seller list to MP 3 products.
After reviewing several 10-Qs and conference call transcripts now, I see management reiterated 2014 year end sales projections as late as October 2014 that missed by $10s of millions only two months subsequent. Accurate forecasts are not their speciality. Just look at this year. A $20m downward revision for 2015 coming as late as August.
And then the potential wild card. Say Drexler has another independent investment vehicle that potentially acquires Capstone (say after the current MP or first right of refusal expires), that could dilute the MSLP common down while he takes a larger stake in the new investment vehicle making his $8m current investment in the common merely an ante on the big pot as he sits on the button. This is the play and the upside would all be swept to himself and co-financiers.
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