Vertical Branding sells As Seen On TV products directly to consumers via television advertising, and to distributors via their current partner P2F Holdings.
Extreme Beam Flashlight, Hercules Hook, MyPlace Cozy, Steam Buddy, Tool Band-it, Zorbeez Streak-Freez
Relationship with P2F Holdings
Per contractual agreement [sec.gov/Archives/edgar/data/1125532/000135448809000619/vertical8k.htm], Vertical Branding allows P2F Holdings to distribute their As Seen On TV products to big box retailers in exchange for royalties. These retailers include Bed Bath & Beyond, Macy's, Staples, CVS, Shopko, Bestbuy, Walmart, TrueValue, Bealls, and Anna's Linens. P2F Holdings has assigned Milen, a new division, to manage operations as a result of this agreement.
Vertical Branding, Inc.
12100 Wilshire Blvd
Los Angeles, CA 90025
Phone: 310.806.9297 [Chris Lipp]
On October 14th Vertical Branding filed a Form 8-K [sec.gov/Archives/edgar/data/1125532/000111650209001567/vert_8k.htm], stating that despite the contract with P2F Holdings, attempts to restructure their debt have failed. As a result, the company's Board is presently reviewing the company's options for reorganization, recapitalization or other methods of deriving value from the company's assets to satisfy the company's liabilities. Because of its working capital shortage, the company has substantially reduced operating expenses by laying off all but three employees and by suspending various operations. In addition to this news, Nancy Duitch resigned as CEO and Alan Edrick has resigned as Board Director. No replacement CEO has been named at this point.
There are currently 4 foreseen paths for the company
1. As a result of weak sales, poor management, and current debt liabilities, Vertical Branding will be brought to bankruptcy court by Gottbetter Capital Master Ltd., subsequently resulting in a filing of Chapter 11 and a total loss for all shareholders.
2. As a result of weak sales, poor management, and current debt liabilities, Gottbetter Capital Master Ltd. will hold the option to purchase 3.615M shares of common stock at the exercise price of $0.025 in order to settle the debted amount of $2.26M.
The previous 2 scenarios are considered the most likely of the 4. Unless something changes [see path 3 & 4] it can be assumed that Gottbetter Capital Master Ltd. will review these two options at or around December 15th, 2009, and decide which
is in their best interest for recovering the debted amount of $2.26M.
3. As a result of increased sales, reorganized management, and restructured debt payments, Vertical Branding will provide a corporate update stating their increased growth, financial security, and etc., subsequently resulting in a surge in the price of
common stock due to restored investor confidence and buying.
4. As a result of weak sales, poor management, and current debt liabilities, Vertical Branding will be purchased outright by an outside entity at a discounted price per share.
The previous 2 scenarios are considered the least likely of the 4 and are completely unsubstantiated by hard facts.
Argument supporting survival scenario [highly speculative]
Vertical Branding is a very small corporation, especially in light of the announcement that only three employees continue to work from this point forward. Small corporations are able to continue operations even in the most dire of times. This hibernative
state is generally referred to as survival mode. The company should be able to make debt payments fairly easily just by running this skeleton crew. While this does not translate to growth, and could even translate into staleness, it does drastically
reduce the chances of bankruptcy. Since Vertical Branding is now, primarily, a research / design / promotion company, the need for a large office space has dwindled. They may even take up the same roof as Milen, of P2F Holdings, in order to
consolidate efforts and costs. Additionally, P2F's vested interest in Vertical Branding is immense. They are, after all, the reason that P2F is able to stock the shelves of hundreds of big box realtors and keep a majority of the profits. This parasitic
relationship may prove fruitful for Vertical Branding in ways yet to be realized.
Moreover, via direct email correspondence with Milen, it has been learned that Vertical Branding's newest product, [as well as Billy Mays' last pitch for Vertical Branding], the Tool Band-it, will soon be advertised on television in a substantial manner in
anticipation of the holiday season. The Tool Band-it was featured on the Discovery Channel who in turn forecast up to $700,000 in sales per week. A link to this video can be found as follows:
http://www.youtube.com/watch?v=PGIGX-68Rwg [Tool Band-it specific information begins at 2:25]
The following information has been dug up via some investigating
1. "P2F is negotiating a price to buy out all of their license agreements from VBI." [source is Mike Shurm, creator of the Tool Band-it, via contact with VBI]
2. P2F currently has 400,000 Tool Band-it units in their warehouse, as well as several hundred thousand "on water and order", current price for distributors/retailers is $12.50 [source is Michael Freede, President of P2F]
3. P2F has bought out the license agreement already for the Tool Band-it, "so we could control it if we were to spend the money and make the commitment while they were in financial trouble" [source is Michael Freede, President of P2F]
4. P2F has started a 60 day national television commercial campaign, priced at $500,000, for the Tool Band-it [source is Michael Freede, President of P2F]
The following questions remain
1. When is VBI planning on informing shareholders of this vital information?
2. What are the details of the sale of the license agreements? [flat fee, continued royalties for both direct sales and retail/distributor sales, etc.]
Please Note: some portions of the information found in this iBox are speculative in nature. Please follow your own due diligence and make decisions based only on your own deductions. Board moderator and assistants are in no way responsible for losses due to trading based on the aforementioned information.