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I think that it was less of Coke and Pepsi abadoning the market and more of them being forced out because, unlike Celsius, they could not substantiate their calorie-burning claims.
http://www.bevnet.com/news/2009/2-27-2009-enviga
I don't think that an acquiring company, looking for a new brand to add to their existing beverage portfolio, is going to pay much attention to the SG&A expenses of Celsius Holdings, Inc. I say that because any acquiring company would already have an SG&A cost structure built into their operations, and could immediately fold Celsius' costs into their business model. They would also typically have their own distribution infrastructure to piggyback Celsius on to, so they could ramp up very, very quickly and generate immediate sales. Rather, I think that strong baseline revenues, a continuing pattern of repeat buyers, resulting in strong sell through, and a uniquely marketable brand backed by clinical studies, would be the more important factors that any potential buyer would find attractive.
Kezzek, thanks for bringing this to everyone's attention. It certainly shows that Carl is far from being the selfish, money-grubbing capitalist that you make him out to be. As you indicated, in an SEC filing Celsius Holdings stated that "On March 10, 2010, CDS converted $4.5 million of the convertible note into common stock at the fixed exercise price of $10.20 per share. The outstanding balance under the loan agreement as of March 31, 2011 was $2.0 million." Now, here is where it gets really interesting. Go back and look at what the price of CELH stock was on the conversion date of 3/10/2010. It was approximately $3.00 a share. Now ask yourself, why would Carl DeSantis convert debt to equity at over 3X the market price, and give shareholders a $3.25 million gift? Could it be that Carl wants the company to succeed so badly, that he is even willing to take a personal haircut to see his friends make money? Now here's an even better question. What do you think would happen to the price of CELH stock if the company announced that Carl DeSantis had decided to forgive all his current loans and retire the existing company debt in its entirety? Like I said in an earlier post, there are "personal" dynamics at work here, that you haven't taken into consideration.
While I'm not sure, I think that any returns would be netted against gross sales, resulting in a lower revenue number for the quarter.
I think that the "operating expenses" have already been curtailed as much as one could reasonably expect. The focus must now turn to increasing revenues. It will be interesting to see how the new DRTV campaign unfolds and how that will impact sales going forward. The margins should be huge with the new Outrageous Orange powder packets, since it is a direct sale by the company with no middle-men to cut into the pie. The cost to ship these packets to consumers who purchase them should be negligible, thereby bringing more of that revenue to the bottom line.
More likely the final writedown of returned inventory from discontinued distribution partners. It looks to me like they are just clearing the decks in order to report the first profitable quarter in the company's history.
Really? Gee that's funny, I remember Carl pushed ALL of that debt out to September of 2014 to give his new management team enough time to execute on the new strategic business plan and become an attractive acquisition for somebody. That's roughly 2 1/2 years from now; plenty of time to reach profitability. You must have somehow missed that very important piece of information in your due diligence and analysis. Here, I'll be very glad to provide it for you.
http://www.celsius.com//sites/default/files/imce/pdf/Q3Earnings.pdf
As of 12/31/11, the company owes CDS $4.5 million, which based on the above, is all due in the next 6 months. What will happen when they can't pay that off is anyone's guess, but CDS has a valid claim on all of the company's assets, it appears to me. I'd be careful with the market cap already at $8 million.
Wippersnapper, thanks for posting the article from Takeover Analyst on Seeking Alpha. Kezzek indicated in one of his previous posts today that he expected the share price of CELH to fall, not rise, from its current level of around 0.40 cents. I couldn't disagree more. In fact, if you take a look at previous acquisitions in the beverage industry space, you would discover that many companies have sold for a price that is equal to 2X - 4X their annual revenues. Celsius Holdings had FY 2011 annual revenues of $8.5M. Applying this same formula would result in a takeover price of between $17M and $34M. With approximately 20M shares outstanding (of which management owns 52%), this would translate into a CELH share price of somewhere between 0.85 cents and $1.70. Also, these numbers do not take into consideration any future revenue growth from international sales, and the new strategic business plan being undertaken by the current management team. It also fails to assign a value to the all-important clinical studies. Like the author in the Seeking Alpha article, I believe that this stock is significantly undervalued, and, like him, I also expect CELH to generate significant returns for its shareholders in the future. As far as the pink sheet issue is concerned. It really is a non-issue, since the exit plan for all shareholders (including Carl) is the ultimate sale of the company to a much bigger player. Your thoughts?
You are correct. There is no other beverage company that can make these kinds of claims, and support them through the validation of six (6) scientific, clinical studies. Furthermore, the advertising claims have passed the scrutiny of the Better Business Bureau's National Advertising Division (NAD).
http://www.nadreview.org/
In making its determinations, NAD considered the evidence submitted by Celsius, which including six separate studies – three on subjects who used the product without exercise and three on subjects who used the product in conjunction with an exercise program. NAD also evaluated whether claims related to calorie and fat burning implied use of the product without exercise would result in weight loss.
Following its review, NAD determined certain claims, as modified, were supported by the advertiser’s evidence, as long as those claims are presented in the context of advertising geared to people who exercise and made clear achieving the promised benefits of the product requires exercise. NAD found the advertiser could support claims that referenced the taste of Celsius and the product’s ingredients, as well as claims that Celsius supplementation results in “increased metabolism" “calorie burning" “fat loss," “decrease in body fat," “greater endurance performance" and “greater resistance to fatigue (increased energy)."
The company, in its advertiser’s statement, said it “accepts NAD's decision as demonstrated by Celsius' current advertising that already implements NAD's recommendations." The company added it will take NAD recommendations into account in future advertising.
NAD, the advertising industry’s self-regulatory forum, examined Celsius’ claims as part of its ongoing monitoring program and in conjunction with NAD’s initiative with the Council for Responsible Nutrition (CRN) – an initiative designed to expand NAD’s review of advertising claims for dietary supplements.
They have already started the implementation of the new strategic plan. The hiring of a public relations powerhouse was the next logical step to this process.
The Company announced today a strategy to expand the Celsius brand through Direct to Consumer initiatives and to restructure and support its retail sales efforts. The campaigns will include DRTV, Affiliate Networks, Banner Advertising, Social and Digital Media, Direct Mail, Viral Marketing and Health Club Sampling. The Company has produced a new package with 30 servings of an Outrageous Orange flavored powder, incorporating its MetaPlus ™ technology. This new powder package will allow for improved margins and cost effective shipping in support of the Direct to Consumer programs. "We believe that by employing these cost effective initiatives, the Celsius brand will achieve a greater market awareness, driving pull through in the retail stores while producing direct sales revenue to the company," said Gerry David, our CEO.
The Company also announced the addition of several senior managers to its executive team:
Ms. Michelle Pease, Director of Operations, to lead supply chain requirements including manufacturing oversight, quality control, fulfillment and regulatory compliance.
Mr. Michael Hopf Sr., Vice President, International, to expand our current international market share where Celsius has gained a distribution foothold. Efforts have begun on the assessment and registration process in several international markets.
Mr. John Fieldly, Chief Financial Officer, to oversee financial reporting, infrastructure initiatives including new management reporting software systems, fulfillment operations, call center operations, and enhanced website capabilities. Mr. Fieldly replaces Mr. Geary Cotton, the interim CFO for the company over the past two years.
Additional information on the new management team can we found at the Company's website, http://www.celsius.com
"We saw significant progress in several areas of our business in the fourth quarter," stated Mr. David. David continued, "The implementation of several key initiatives to solidify our infrastructure, improve our retail presence, explore international opportunities, execute the Direct to Consumer marketing plans, and the recruitment of critical management has positioned Celsius for an exciting 2012."
Looks like they are far beyond the "exploring" stage to me.
http://celsiussverige.se.preview.binero.se/
Kezzek, a couple of large international orders should alleviate most, if not all, of those concerns. Also, you may want to go back and check your math. I believe that the amount owed to CDS is less than the $4.5 million you alluded to in your post. I remember it being at $4 million, before Carl decided to convert $500,000 of it into equity at 0.30.
Here is the quarterly breakdown of revenues, along with the net gain or (loss) for the same period, from FY 2009 through FY2011.
Reporting Period | Revenues | Net Profit (Loss)
Q4 2011 | $1.8 million | ($716,000)
Q3 2011 | $2.5 million | ($278,000)
Q2 2011 | $2.0 million | ($456,000)
Q1 2011 | $2.2 million | ($459,632)
Q4 2010 | $135,000 | ($5,581,748)
Q3 2010 | $1.8 million | ($5,036,886)
Q2 2010 | $4.1 million | ($3,026,284)
Q1 2010 | $2.3 million | ($5,852,484)
Q4 2009 | $2.4 million | ($7,759,029)
Q3 2009 | $1.3 million | ($2,717,905)
Q2 2009 | $1.2 million | ($1,439,994)
Q1 2009 | $1.0 million | ($1,177,930)
I probably should have included this link in the message I posted earlier today.
http://www.celsius.com/success-stories
Since nobody is updating numbers on this board, I thought that I would provide them, as a backdrop, for anyone considering making an investment in this company. Here is look back over the past three years. It appears that considerable progress has been made, and a baseline has been established. The question now is can they grow revenues from here, and build upon the foundation that has been laid? A new management team (Geary Cotton the former CFO has been replaced, as I expected) along with a new public-relations and marketing firm look to be among the major changes that have been implemented in an attempt to turn things around. The brand has had quite a few success stories from actual users, and are listed on the company web site. Let's see if they can leverage that in the social media and DRTV space to generate additional sales.
Q4 2011 – $1.8 million
Q3 2011 – $2.5 million
Q2 2011 – $2.0 million
Q1 2011 – $2.2 million
Q4 2010 - $135,000
Q3 2010 – $1.8 million
Q2 2010 – $4.1 million
Q1 2010 – $2.3 million
Q4 2009 – $2.4 million
Q3 2009 – $1.3 million
Q2 2009 – $1.2 million
Q1 2009 - $1.0 million
Here are some images of the new Outrageous Orange flavor that will be available nationwide at Costco warehouse club stores:
http://www.costcoconnection.com/connection/201201#pg84
http://issuu.com/bevnet/docs/novdec2011/10?mode=a_p
Did you happen to notice the new label and packaging? I wonder what other surprises are in store for us? Still accumulating....
The fact that Carl recently converted $500,000 of debt into equity at a premium to the market price tells me that your negative machinations are overblown. Besides, Carl had the chance to BK this company on two prior occasions; once in 2008 and again just recently in November. If he hasn’t done it by now, chances are he’s never going to use that tactic and take down shareholders; many of whom are his closest friends. He does, genuinely, want the company to succeed. Furthermore, Carl doesn’t need the money or the bad karma associated with your scenario.
Kezzek, a good place to start might be the company’s own web site. There is quite a bit of new and fresh information there regarding executive changes, along with a few hints at where the future direction of the company may be going. Read carefully, because it is subtle and easy to miss. Check out the latest issue of Bright Connections, too, for a glimpse into what has been happening: http://celsiusbrightconnections.com/. Again, be sure to be thorough when reading through the issue. You’ve gotta love the job that both Vitamin Shoppe and Costco are doing. The new non-carbonated orange flavor, I believe, may be exclusive to Costco. In any event, I seriously doubt that they would have developed a new Outrageous Orange flavor for a national club warehouse, unless the sell-through was strong, and the future promising. JMHO, of course. As for specific numbers, those are readily available from prior press releases the company has posted under the investor section of the aforementioned web site, along with the earlier 10-Q filings. While the company has filed the required Form 15 with the SEC, they have not gone totally dark by continuing to post quarterly results (albeit non-audited) in public press releases. Their designation as a “no information pinkie” as you like to call it is not totally accurate in this respect. A quick comparison of sequential and YOY revenues, over the past few years, along with a shrinking net loss, shows the turnaround has been solidly in place for at least the last three quarters. From there it is relatively easy to extrapolate the margin expansion, which reached the low point in Q4 2010. Making phone calls to retailers who stock Celsius, “boots on the ground” channel checks, researching articles in various trade magazines and publications as well as talking with industry executives all help to cobble together a picture of Celsius as a company that has put its darkest days behind it. I’m actually glad that there isn’t much investor interest at this point. It allows me to quietly accumulate shares in the market, at a price that is below what CDS paid for a large chunk of the equity that they now hold. I’ll just patiently wait for what I believe will be the future pay-off, when the company is sold. I hope that answers your questions.
Kezzek, you were correct in pointing, out on numerous occasions, that the big mistake these guys made in the past was trying to go big with a national marketing strategy too soon. The results were catastrophic; huge marketing expenses, massive quarterly losses and a total loss of investor confidence. How the Celsius Board of Directors allowed the squandering of almost $14 million raised through the secondary offering in 2010, with little, if nothing, to show for it, almost boggles the mind. The word fiduciary duty comes to mind. Fast forward to today; a new management team, a revamped BOD and a more laser-like focus on sales & marketing, and it looks like a much different company. I would think that even you would give them credit for the progress they have made over the past nine months. The balance sheet has improved, costs have been drastically reduced, margins are improving from the abysmal showing in Q4 2010, and they are close to showing a breakeven, if not profitable quarter. They have eliminated those retailers where the product had been slow to gain any traction and where marketing costs were crimping margins (mostly the drug-store chains), and instead have focused on where the product enjoys a strong following, sells through with regularity and doesn't require a lot of capital to advertise and support the brand. That said, there is still much work to be done, but it is clear that the company is in the throes of reinventing itself. It appears that Carl is willing to give Gerry David and his new team a two year window to take the company and the Celsius brand in a different direction. Personally, I think that there are going to be some major changes implemented under the new management regime. Only time will tell if they are successful and can build on improving shareholder value. They should be close to reaching $9-10 million in revenues for FY 2011. While that’s a far cry for the $25 million that was projected by the company in 2010, it’s a good baseline to start building from in 2012.
Rage, I believe that the exit strategy for Carl, and his friends who have invested in this enterprise, will be in the ultimate sale of the company at some point. There hasn't been much in the way of formal communication out of the company, and I expect that will remain the case for the foreseeable future. Carl now owns 52% of the outstanding shares. There is no legal obligation to report on anything, since they filed to "go dark" under SEC Rule 15. They will, most likely, only report their quarterly results once every three months. In essence, we now own a publicly traded company that will act, for all intents and purposes, more like a private one.
Kezzek, everyone who has invested in Celsius has lost a lot of money on this stock. However, that's old news. I have to think that if Carl really did not believe that there was something of value left here to build upon, then he would not have taken the steps that he has. From what I have been able to ascertain, Carl DeSantis is not a quitter, and he is determined to see Celsius succeed. I think his pride has suffered through all of this, and he has lost face with many friends who have invested in this company based on Carl's name, and his previous success in other business ventures. At this point, the company has stopped the cash hemorrhaging, and reduced expenses to where they are almost cash-flow positive. With a $212,000 operating loss this last quarter they aren't that far away from profitability. It appears that they have established a solid base of consumers who are using the product regularly. The past three quarters have shown consistency with regard to revenues. I view that as evidence of establishing market share in the fitness and energy drink category; a very strong positive. I think that Carl will ultimately get it done for shareholders through the sale of the company somewhere down the road. How long that may take is anybody's guess. Geary Cotton seemed confident that he was going to be able to find a strategic partner, or shepherd the company through to the hands of a willing buyer. He was unable to accomplish either of those objectives. As a result, I wouldn't be surprised if Carl decided to find himself a new CFO, as well. There's no question that you were correct on many things that you said in the past about Celsius, but this is now a new company IMO. I hope that investors can approach the current situation objectively and with a mind open to the future possibilies for both the brand and the company. This story is far from over. We do but turn another page.
Carl has breathed new life into Celsius. It will be interesting to see what approach the new CEO will take. He's not from the beverage industry, so I expect that he will likely bring on new line extensions with the MetaPlus formula. I notice that Carl has also eliminated three board members, leaving only Milmoe, Lynch and Swanson. Who he brings on to the BOD will say a lot about the direction that Carl wants to take the company. Should be interesting to see how it all unfolds.
My guess would be that if Carl Desantis truly believes that this company has turned the corner, and has a real shot at producing a profit over the next 6-12 months, he might consider restructuring the note and extending the terms of repayment over a longer term, or possibly convert the note into equity.
I disagree. It seems to me that after unsuccessfully attempting to bite off more than they could chew, this company has settled into producing a very nice stream of revenue from a solid base of consumers who use and like the product. Almost all of the sales over the last two quarters have come from reorders; a very good sign. If they can continue along this path, their Q3 & Q4 comps are going to look very good versus last year. They have even gone so far as to reduce expenditures to a level where cash flow breakeven is a distinct possibility before year-end. This story is far from over in my opinion.
California Court rules in favor of Celsius.
No longer an issue:
http://legalnews.arnstein.com/wp-content/uploads/8-11-11_RothmanLaw360_CelsiusArticle.pdf
These two links may provide a clue to future activity:
http://finance.yahoo.com/q/hp?s=CELH.PK&d=6&e=21&f=2011&g=d&a=0&b=22&c=2007&z=66&y=66
http://www.otcmarkets.com/stock/CELH/short-sales
Why, over a 10 day period in early March, was somebody rushing in to purchase shares between 0.35 and 0.97 cents on total volume of 892,000 shares?
It didn't appear to be a result of short covering, as the number of shares short was virtually unchanged from February 28, 2011 to March 31, 2011.
It looks like just plain old long positions being put on in a hurry.
The question is why?
Competition is moving in.........
http://www.poundslostshot.com/index.php
Trinityz1, I doubt you've ever shorted a stock, much less a penny stock. Stick with your dividend payers and municipal bonds.
When is somebody going to update the sales numbers posted here? The numbers found under the section called "Financials" are dated and do not reflect the most recent quarterly figures. This message board has gone downhill. Yahoo has a much better forum.
Spoken like a true believer. LOL.
Who is doing the selling at these prices? Any ideas?
Trinity, you should go back and re-read your own posts. You were always looking to pick up shares at .01 to .02 and as a result, you cannot convince me that you own a single share of this stock.
You always stated that you would be patient and bide your time for a lower price; even lower than .05.
You missed this one. Plain and simple.
Trinity, I doubt that you are going to see this trade back below it's 200 day moving average, which is at 0.07. The fundamentals for this company are improving dramatically, and the trading pattern clearly shows accumulation by investors. You may want to take a gander at some of the posts on the Yahoo Board. There is some good information to be found there. I hope that you decide to join the rest of us longs for what I think is going to be a great ride!
You seem to be the only one concerned about it. Why don't you go?
Sidney, I would recommend the green tea flavors. They are awesome!
Oh really? I guess that is why they recently announced the release of their new H.A.R.D. Nutrition Functional Water Systems, which is supposedly set to revolutionize the functional beverage category.
You still didn't answer a single one of my questions.
Trinity, you said:
"My analysis includes a whole more than what you might find in their PR releases."
Enlighten me...... What kind of analysis, specifically? What kind of background, or industry experience do you have that enables you to perform a thorough fundamental analysis of this company? Where did you obtain your information to perform your "analysis"?
You also said:
"There is in fact a very direct correlation of events between the two companies when comparing Apples to Apples."
Such as?....... What specific events are you referring to?
The investors who bought at $3.20 were way too early and bought this stock "on the come"; without realizing that there was much work to be done to build out the business, obtain working capital, and develop the distribution and marketing infrastructure.
DCBR doesn't even have a distribution infrastructure or a marketing plan from what I can tell. They've got product but nothing else. As far as distribution goes, I guess that DCBR considers the ONE 7-11 Franchisee in Colorado who attended one of their local meetings and expressed an interest in carrying their product in ONE store as a distribution plan. Yeah, right!
As far as I can tell comparing DCBR and CSUH is like comparing Apples versus Oranges, and the DCBR Apple has more than a few worms inside of it!
This stock is about as far removed from DCBR as you can find. I've read the press releases for DCBR and they are a bunch of pump and dump, fluff PR's. That last one about the Pediatric Neurosurgeon was almost comical. I'm surprised that they don't put out a press release every time the CEO takes a dump.
To make matters worse they have been giving shareholders the circle-jerk with their audit, and have been relegated to the grey market (pink sheets) without even a published bid or ask price.
Celsius is not even close to DCBR in the way they communicate (or what they communicate) to shareholders. On top of that they are current with all their financial filings, and trade with a bid and ask on the NASDAQ Bulletin Board. Steve Haley has been upfront and honest in all respects, unlike that clown Richard Pearce at DCBR.
I understand that you are upset with your investment in DCBR, but don't even attempt to draw a connection between them and CSUH. They are miles apart in my opinion.
The drop was on low volume. It doesn't mean jack sh*t!
This was the grabber for me!
"Our sales in areas where we have established distribution are growing and over 80% of our fourth quarter revenue was from reorders."