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My guess is that Sam will lay low for a while as he repairs the balance sheet. The damage caused by Fresh Diet has been extensive. At close to 32 million fully diluted shares, IVFH will be a penny stock for a long time to come.
The concerns are timing and judgement. If competition creeps into other segments of the market, company growth will be disappointing. This will force management to take action sooner rather than later. Having just gone full cycle on a disastrous acquisition, one has to wonder about future acquisitions.
As for an acquisition of IVFH, sorry, but I don't see who would acquire it or why they would acquire it. You would have to explain to me what the attraction is and to whom. I see no reason why US Foods would acquire it and their reliance on US Foods almost guarantees that no one else will touch it.
IVFH is capable of earning roughly $2.2 to $2.5 million a year in pre-tax income right now. They should be able to grow that roughly 7 to 10 % annually. And while the number of fully diluted shares is sickening, it should be under control for a while. With IVFH's substantial tax loss carry forward, it will be years before they pay taxes.
I see three hurdles in front of the company.
1) How much will the Fresh Diet bankruptcy cost them? They did not address this in either the 10Q or the conference call. I am certain the answer is not zero, even if they win every trial. Lawsuits in a situation like this are inevitable.
2) What happens in the next recession? There will be another one. We just don't know when. This is not a company that makes huge margins.
3) How many more competitors will enter the field? They admitted that they have competitive pressures in Chicago. Let's see what happens in other places around the country. The days of 10% year over year growth may be ending.
Overall, it was a decent quarter. Nice. Boring. The company needed a quarter like this. I don't think the next one will be as clean and boring.
I have noticed a trend that when IVFH issues their numbers just prior to the quarterly conference, or on a late Friday afternoon, they are usually not very good. They prefer that you just read the press release and not the 30 pages of detail.
When they give you plenty of time to read the SEC filing, it's because they want you to read the entire filing.
We still have a few hours before the call, but time is passing quickly. Funny how the SEC gives you 45 days to get this done and some companies require 44.9 days to do it.
Just curious. Has anyone seen an update from that fool who wrote the article for Seeking Alpha about how Sam stole Fresh Diet at a great price. I laughed when I read that article the first time and I laughed when I reread it again over the weekend. Utterly clueless about the meal plan industry.
Correctomundo, Geodan. The ambulance chaser is saying things to make his client feel good and detract from customer and employee outrage. It's what he does. It's his job. But it doesn't mean there is an ounce of truth in it.
Doesn't matter in the long run. This company's fate was sealed long before Sam got a hold of it. I think there was one strategy Sam could have implemented that might (still far from even 50-50) have changed the story. But since he failed to pursue this one strategy, IMO, he was destined to fail. What Zalmi was thinking in buying this back for $10 is just beyond my comprehension.
In conclusion, IVFH made a poor decision in buying the company. To their credit, they threw it overboard before it sunk the entire ship. Now, however, I believe there will be some additional costs to pay before this story is put to rest.
You have no idea (nor do I to be honest) what guarantees were signed on kitchen and office leases, other contracts, and other deals. FD had, if memory serves, $4.6 million in unearned revenue when it was spun off. Nearly all of it was recorded in the 18 months IVFH was the owner. That cash to pay for it wasn't there when the business was sold. So let's see how the lawyers work this out. That alone could be a bit of an issue.
I can only tell you that any and all transactions within 2 years of a bankruptcy are reviewable. As for the claim of 'improper conduct', one lawyer's managerial incompetency is another man's improper conduct. We will see how strong that veil is I am sure.
You could be right. This could all mean nothing to IVFH. But I doubt it. FD had zero chance of success. The fact that Sam wrote all the FD assets down tells you he knew that. It was a good move from a stock market point of view. But it isn't going to look good to a jury if it gets that far. (And it won't).
Finally, FD operated in many states. It's not clear how much of the action will take place in Florida. And I'm not sure where all the companies are incorporated. Could make a difference.
‘I feel like I was ripped off!’ The Fresh Diet closes without alerting employees, clients
Read more here: http://www.miamiherald.com/news/business/article91787977.html#storylink=cpy
It's all there in black and white. Just Google 'Miami Herald Fresh Diet'. This story doesn't end here
Correct. Not good. But inevitable. FD lost almost $11 million in 2015. By what possible logic could anyone expect it not to lose a bundle in 2016? Sam knew it. That's why he sold 90% of the company for $10. Sam valued the company at roughly $11. You shareholders paid $14 million in stock and sold it a year and a half later at a value of $11. And that doesn't count the cash IVFH poured into it to keep it alive.
As for the $4 million that management supposedly ran off with, that is the stuff of absolute fantasy. It's a rumor with no basis in fact. It's not even close to being true.
Now comes the part where the lawyers circle the corpse looking for some meat for the creditors. You can't sell a company two days before an inevitable bankruptcy and think you have washed your hands of the legal mess. Can you do it five months before the bankruptcy and get away with it? When you value the company at $11 and write down your investment to zero on the sale, you are admitting it has no future. Let's see how that stands up under cross examination.
FYI - you all might want to read the Yelp reviews of Fresh Diet. It would appear that Fresh Diet is no more. No confirmation via an SEC filing by IVFH. Wonder if they know.
I would agree that IVFH is a bit undervalued. I believe it should trade between .45 and .65 based on what we know today.
Because we don't have public information on FD, we don't officially know what is happening there. You shareholders may think that now that it has been spun off, IVFH has no remaining liability. I believe you are wrong. In the event FD fails, I think there are still shoes left to fall.
That said, IVFH can probably afford to pay whatever penalties and legal fees it might have to pay after extensive negotiations. Again, this only happens if FD fails. I won't publicly speculate on FD's status other than to say that the meal plan business is a very difficult business to run profitably.
As for the current stock price, Sam has never done anything to promote the company stock price with the retail trade. He tells you nothing. He has never admitted his culpability in the FD debacle, yet his handpicked Board rewarded him for nearly bankrupting the company with another contract and more juicy stock options. Maybe now you know why this trades towards the lower end of the range and probably will for the next 6 months.
There is no news and you certainly have no inside track on what's going on. Remember when Sam brought in Oligvy and Mather to help with FD's marketing. That worked like a charm.
There's a spot on that bridge just waiting for you to put up a toll booth. You can have it for just $30,000 in dead presidents. I'll throw in a reference to FD's outstanding LTV on customers who signed up after 2 PM on odd numbered Tuesday's in the back half of months ending in 'ber'. Those were the trends that showed a meaningful turnaround in the making.
So Sam goes out and buys FD which trashes the stock value to existing shareholders by roughly 80%. The punishment for this gross mismanagement was another year on his contract and continued juicy stock options. Anyone here see a problem?
No Stocks, I didn't disappear for a while. When a man is making the kind of money that Sam makes from IVFH, he's supposed to make good decisions. He gets paid to do that and very, very well I might add.
Admittedly, I sold this on the way up a bit early. It didn't occur to me that there were so many gullible people in this stock willing to take Sam's word over reasoned thought. Sam had no idea what he was buying in FD. He was the last to know. That's why he sold it for $10 to the founder.
Maybe he'll buy another disaster and the board can buy him a plane as his reward. I yacht would be nice. He can call it the 'Shareholder Lament'.
Stocksnseeds -Think about this for a minute. Let's go back five years or so. The stock was pre-split about 60 cents. Since then, if I remember correctly, IVFH did a reverse split to pump up the stock price. Then it acquired FD, issued massive amounts of shares, and now you have about 3 times as many shares outstanding as you did three years ago, and a much lower stock price.
If this has been such a disaster, why are you still here?
The fact is that this company has a decent core business. It's all a question of valuation and management. I have been happy with the valuation at times. The management, not so much. For me, this is a trade, not an investment. But I watch it weekly and I stay informed. I also know BS when I hear it. Sam's optimistic reports about FD turned out to be very wrong. The meal plan business is undergoing rapid changes and competition. Some of you have your opinion about how FD makes money and I have mine. I have been right for the last five years. I'm shooting for six.
Born - I truly wonder what it must be like to live in your world.
Born - if you believe this video, perhaps you'd like to buy a bridge I happen to have for sale?
Amigo Mike - actually, it's a great decision. Sam's objective may not be the same as yours. You want questions answered. Sam may not have the same goals. Sam calls the shots so 6:30 it is.
I agree with you. It is ridiculous.
How much more of Sam's poker skills can you afford? Does he reverse split to get this back over a buck or do you continue to play stinky pinky for the next four years while the dust settles?
Nobody better than Sam in stirring up interest in a small food brokerage business.
The decision to purchase the company was just wrong. IMO, there was a slim chance that an experienced professional could turn this around. Asking amateurs to do this was just absurd.
That said, this was a fool's errand. Mistakes were made that created greater and faster losses, but the outcome of the game was known well before the opening kickoff. Sam came to the realization that this was a disaster a bit late. I don't think to this day he knows what happened and why.
In the end, defeat is defeat. I suppose a TKO is better than being buried right after the fight. IVFH will recover. It will live on. It will take five years or more to recover from this disaster, but if you are patient, I suspect recovery will happen.
Geodan - I found all the information on sec.gov last night. The 10-K was up there after dinner. The FD stuff is towards the back under discontinued operations.
I respect your view that actions matter more than words. Were I a shareholder, however, I would want to know that my management team understands not just what happened but why it happened. Without that admonition, you cannot assume that a similar mistake will not happen with the next acquisition.
Personally, I find that people, especially competitive people, refuse to admit that they are as responsible for failure as they are for success. It's always the fault of someone else, some condition, or the market. Any rational and knowledgeable observer would see that this is not the case here. Hearing that said indicates that maybe lessons have been learned. Not hearing it only reinforces the belief that it may well happen again.
This isn't the same genius on Simply Alpha who told you how Sam stole FD for a great price and was now poised to make huge profits is it? Seems this guy does the same research that the last guy did. He listened to Sam and quoted him. Not worth the zeros and ones he killed to write this. Pure fluff.
If Sam believed that the justification for buying FD was to be the driver of company income in the event that IVFH lost its distribution with USF, then you, as shareholders, need to get him out of office immediately. No industry observer who could fog up a mirror believes that to be a realistic assessment. With some limited exceptions, this is not a scalable business.
My guess is that Sam bought it thinking FD was in the food business. That made it a natural complement to IVFH's core business. That assumption is incorrect. FD is a brand marketing business that sells food. It is a heavy consumer products business. It happens to be one with some unique competitive strengths and serious weaknesses.
I believe Sam did not understand what he was buying. It resulted in not understanding how to manage it.
Amigo - If you knew the players at FD and you understood the Sam's mindset, you would know that the situation is not as benign as you make it out to be. This is a case of arrogance and a refusal to take appropriate remedies. In the end, Sam did what he had to do because all other solutions were gone. But you, as a shareholder, are the one paying for this disaster without so much as an explanation. I knew enough to avoid this situation. My interest was FD, not IVFH.
Amigo, I suspect you are right. I think the company is worth about 60 cents a share at present. What disturbs me is that there has never been an explicit admission from management that this was a major league bad decision that was exacerbated by even worse execution. No one has stood up and taken responsibility. No one has publicly said why this decision was made and what the expectations were when they bought it.
This nearly sunk the company. What is to prevent the next acquisition from being just as bad?
Let's see if there is an admission of guilt in the morning or if they are just going to sweep this enormous screw up under the rug.
10-K is out. Find it on SEC.gov. Just brutal but at least IVFH won't be paying federal income taxes for many years.
Depending upon if and when FD fails, there may be considerable credit card charges that were incurred under IVFH. I am sure that there have been numerous legal discussions about potential liabilities. But as you pointed out, this is America and anyone can sue anyone else for the smallest of reasons.
We will know the final score very soon. Let's see how it stacks up when the final autopsy is done. I can only tell you from the bleachers that this was a colossal screw-up.
If FD should go belly up, who do you think the lawyers representing the people who paid for food but did not receive will sue? There's your $4.6 million.
Doubt no more.
http://www.otcmarkets.com/stock/CYCA/news
Cytta VeriSmartPhoneTM Technology Integrates with the Oracle Cloud/IoT Platform
SAN FRANCISCO, CA / ACCESSWIRE / March 15, 2016 / Cytta Corp. (OTCPINK: CYCA) Cytta is pleased to announce they have entered into a partnership with Oracle integrating Cytta's VeriSmartPhone(TM) technology with the Oracle Cloud/IoT platform. Cytta, and Cytta's Healthcare Partner Doctor Direct Inc., will be utilizing Oracle Cloud/IoT functionality for all the data derived worldwide from the use of their proprietary VeriSmartPhone(TM) technology.
Cytta created the VeriSmartPhone(TM) data acquisition model over the previous six years of Research and Development and successfully demonstrated the technology with numerous field demonstrations and live medical patient remote monitoring trials.
Cytta will be utilizing Oracle software in version 2.0 of the VeriSmartPhone's proprietary android O/S software currently being finalized. Oracle will now be supplying their Database platform including analytics, security and big data to the VeriSmartPhone(TM) model.
Cytta has also formalized their vertical market licensing model, with the completion the acquisition of the Healthcare vertical market by Doctor Direct Inc., and their ongoing rollout of the Cytta technology. Cytta's licensing model requires an initial fee for the license, a dilutable equity interest and a Royalty in perpetuity. Cytta will supply and upgrade all the technology for their vertical market partners and supply corporate management and sales and marketing expertise as required. The Oracle Cloud/IoT Platform will also be available to any of Cytta's partners in other vertical markets currently being negotiated.
About Cytta Corp.
Cytta Corp. is an IoT remote monitoring connectivity system and is known for its Cytta Connect open source WiFi, cellular and satellite VeriSmartPhone(TM) platform, a highly scalable and secure IoT two-way real time monitoring solution. The Cytta VeriSmartPhone(TM) technology consists of an 'intelligent' rooted android smartphone reprogrammed at the operating system level as an IoT control interface. This reprogrammed very smart device automatically connects all Bluetooth remote medical monitoring devices to the Oracle Cloud/IoT Platform, and from there to the designated recipients, creating two-way real time data, video and voice communication. The Cytta Connect technology automatically connects all remote monitoring devices to Oracle's Cloud/IoT platform creating real time communication for all IoT market segments.
About Doctor Direct Inc.
The Doctor Direct medical remote monitoring technology is complete, live patient tested and has been field deployed. The Doctor Direct system is completely open source - Automatically connects any Bluetooth health or wellness devices (i.e. Blood Pressure, Blood glucose, Pulse oxygen, digital scale, etc.) to the VeriSmartPhone(TM) to the Oracle IoT/Cloud and on to the caregivers anywhere, and anytime. Data is automatically received by VeriSmartPhone(TM), interpreted, assessed and recipients determined. VeriSmartPhone(TM) transmits data in real time to the Dr., Nurse, Caregiver and/or family member along with determination of action level or importance. Dr., Nurse, caregiver, or family member responds to patient via voice, video, SMS or email in real-time through a VeriSmartPhone(TM) in the patient's home. The Doctor Direct remote patient monitoring system, combined with the new billing/CPT codes for the service, has created the opportunity for real-time patient monitoring and a significant revenue stream to the Physician for providing better quality care.
Safe Harbor Statement/ Forward-Looking Statements
Statements included in this press release, which are not historical in nature, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements relating to the future performance of the Company are subject to many factors including, but not limited to, the customer acceptance of the products in the market, the introduction of competitive products and product development, the impact of any product liability or other adverse litigation, working capital and availability of capital, commercialization and technological difficulties, the impact of actions and events involving key customers, vendors, lenders, competitors, and other risks. Such statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. When used in this press release, the terms "anticipate," "believe," "estimate," "expect," "may," "objective," "plan," "possible," "potential," "project," "will," and similar expressions identify forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof, and we do not undertake any obligation to update any forward looking statements, whether as a result of future events, new information, or otherwise.
CONTACT INFORMATION
Cytta Corp.
Gary Campbell, CEO
Direct (702) 900 7022
Office (702) 307 1680
Email: Gary@Cytta.com
Website: www.Cytta.com
Doctor Direct Inc.
Natalia Sokolova, President
Cellular (917) 574 2312
Email: natalia@doctordirectinc.com
Website: www.DoctorDirectInc.com
Investor Relations Contact:
Complete Advisory Partners
Office: (586) 228-2290
Cell: (586) 801-9002
SOURCE: Cytta Corp.
© Copyright © 2016 Accesswire. All rights reserved.
Geodan - the problem with the greater fool theory is that someone is the greatest fool. Sam and all his shareholders played that role. It will be very difficult to find someone to buy the company.
The simple fact is that by my estimation, Sam paid 3 times its replacement cost. As the industry becomes increasingly crowded with fools all trying to price lower than the other guy, no one makes any money.
Don't hold your breath waiting for a white knight to come along and make IVFH's 10% worth something. You have a much better chance of seeing Panama win the Olympic gold medal in ice hockey.
Don't be shocked if that $4.6 million comes back to haunt the company. The proposition that FD is a viable business as a standalone entity is very much an open issue. You'll know for sure come the end of the month, but my guess is that FD had sales of $1.5 million/month in 2015 and losses of very close to $1 million/month during the same period.
Turning that ship around is going to take a lot of capital and some brilliant marketing. That's a very tall order for any organization.
" In other words the chances of getting paid are not high." Just a tad understated Geodan. The fact that IVFH already wrote it off completely tells you they have absolutely no hope of seeing a nickel.
So they off load all these liabilities on a company that's losing roughly $1 million a month. It's not clear whether FD survives weeks, months or actually turns a profit someday. Sam already placed his vote when he wrote off the $8.7 million on the day he signed the paperwork. Just curious what happens if and when FD can't pay its creditors. I'm guessing these claims aren't going to just disappear.
Interestingly enough, several successful companies in the industry rely very heavy on social media and digital advertising. It can work in some circumstances.
It works best in the health and fitness segment of the business. FD has no dog in that fight. They are 100% convenience and diet. It works very poorly in the convenience market and so-so in the diet market. There are other forms of advertising that are much more effective in those markets.
You need to remember that this is all about scale. FD needs enormous volume to be profitable because it has a lot of overhead. That means marketing has to be scalable. You have to be able to invest a million dollars cost effectively when you have it to generate new customers. Finding a cost effective and scalable marketing technique is a problem for everyone in the business.
Dollar for dollar, the meal plan business is one of the toughest businesses I have ever studied. So much has to go right to make the company successful.
But the meal plan business is not a business about blocking and tackling. Sure, you have to do those things well to be successful, but that is nowhere near enough. If you don't understand consumer marketing and branding, you will not be successful.
Sam is a numbers guy. Strike One. This business is full of numbers guys who failed. I believe Sam was attracted to the business because it was A) statistically cheap (based on like businesses) and B) a food business. He naturally thought there would be significant economies of scale. Except FD is not a food business. It is a marketing business that sells food. It could just as well have someone else make it. FD is not and has never been a food company. It is a lifestyle company that sells food. Strike Two.
And the third strike is branding. IMO, the Fresh Diet has never had a well defined brand image. When you think of Fresh Diet, it is not clear who it should appeal to and why. Asking finance and operations people to run a branded consumer products company is like asking a soccer player to play wide receiver. You may get lucky and he's really good. But more than likely he's playing a game requiring very different skills.
It's there in the 8K. Zalmi paid $10 for it. I guess he offered more than the guy who offered $2.99 and the other guy who offered 6 box tops and a broken slinky.
I think you are right. They didn't show a lot of detail. I am comfortable that IVFH, without FD, was good for about $2 million a year in income. But FD was losing about a million a month. Let's see what the numbers are by the time we see the Q1 results on May 15.
Geodan - read the 8K out today. IVFH, without FD, shows a micropenny in EBITDA, a loss after interest expenses.
I wonder where the guy is who wrote the glowing report when they bought this. Did he just take the check and disappear?
The Q4/2015 and Q1/2016 reports should be horrible. In the meal plan business, Q4 is always the worst quarter. It will be interesting to see how many shares are outstanding as of the day they divested this. I will guess it is more than 22 million. Someone had to fund about $5 million in losses for Oct thru Feb. IVFH doesn't generate that much cash.
That's coming. In The Donald's terms, this was a yuge disaster. Sam needs to do something to put this behind him. I expect a reverse and an application to either the Amex or the NASDAQ within the year.
What a POS! Thanks Tom.
The problem with post-FR valuation is that IVFH had roughly 7.5 million shares outstanding before it bought FD. As of Q3/2015, there were a bit under 24 million outstanding.
By the time they sell FD, it will have been five months since that report. Let's be generous and assume they only lost $1 million a month in Q4/2015 and Jan. and Feb. in 2016. So how many shares outstanding now? We'll find out in mid May when the Q1/2016 report is filed. Maybe sooner.
The good news is that the bleeding is going to stop. The bad news is that the potential liability for prior ownership will continue for many months following the sale.
Geodan - let me second your advice to Born. I invested a large amount in a friend's company. It was a sure thing. Naturally, he failed spectacularly. Everything we were led to believe did not come true. In short, I and a few others I know took a bath in that one. You don't need to diversify to more than 20 to 25 stocks, but having just 3 or 4 is not a wise strategy.
Even good managers can make some really horrible mistakes. Some are good at turning companies around but not growing them. Some just the opposite. Stocks are just pieces of paper. Don't fall in love with them. Like whiskey, they will never love you back.