3-18-15
Message From Matt Veal - CEO HJOE to Shareholders & Fans!
As CEO of Hangover Joe’s, I’m a trained skeptic. Earlier in my career, I was an auditor, I’ve either ran or worked on all kinds of audits, from Insurance Companies, Banks, Counties, Cities, smaller publicly traded companies and private companies of all kinds, so I’ve had to have the answers for skeptics throughout my career. As your CEO, I routinely bet limited time and money and honestly have far less margin for error than the average person. Add to this that if I wasn’t able to answer my skeptical attorney wife with some sound logic, I don’t think she would have permitted us to put our retirement into Hangover Joe’s in the last year! If we didn't believe we were going to succeed and make this the company we all know it can be.
In my 20 plus years of being involved with public companies i have never seen the kind of opportunity that i see with Hangover Joe's, and I might add the co-founders are very hard working and driven to succeed In spite of that I see a lot of skepticism about our company’s announcements, and since I think that skepticism is more than what the situation deserves, would like to use this opportunity to bring some perspective on things.
In the rest of the economy, the normal state of affairs is that if you don’t believe someone, you can simply choose to walk away and do something else, but that’s about it. Stocks, because of Regulation SHO legally permit shorting, so that if you don’t believe a Publicly Traded Company, you can bet against them and if you are right, make a profit.And Hangover Joes has seen considerable amount of shorting recently! I can see how it might be attractive to some – we have disclosed in great detail the convertible debt positions, and for those willing to do the math, its possible to estimate how their might be an increasing supply of stock available in the future that might be a source to cover the short position, thereby reducing the shorter’s risk, and with a little more effort possibly the stock can be driven down, thus creating profits for the shorter.
However, The Company has the levers of sales available to it. In the case of Hangover Joe's, ultimately any decent size contract will ultimately resolve the Company’s issues, which are more to cover past debts than anything else.but the investor’s recovery requires time for that process to take root. We are on target with our original statements of being able to do 5 million in sales. I would say we plan to be between 3-million and 5 million and the key is the time factor on chain and planogram agreements and when they start plus international sales.
A copy of the contracts of our recently announced Korean deal will be in the upcoming filings - this is a 2.5 to 3 million year deal to start and that is not taking into the Koreans also starting the old contract in Japan. In our situation, we can sign a contract /purchase order, gain regulatory approval, but still must ship the product and collect from the customer and then finish our reporting cycle – so the mere announcement of a contract, still has room for disbelief to some. Given the financial incentives at stake, there is good reason for the shorter to bash, and hope to find someone to take the bait – and we have seen our share of that recently as well. And in a short run situation, the short can profit. But as time passes, the short may have created a considerable amount of cheap stock, but the new holder isn’t necessarily looking for the post from the shorter to make decisions, instead they would be more interested in the likelihood of improved performance of the company.
Since there is news enough to demonstrate the kind of sales, given the already well known production costs, to create enough profits to repay the companies convertible obligations in time, and most of its non-insider debt, the remaining questions about the company’s future revolve around time and likelihood. Since the Company originally announced a deal in Japan/Korea a year ago; our Korean announcement is partially a follow up of the original deal. At a minimum, the original deal was delayed – which is scary for the Company and the investor.
Our original representative, although vetted by Warner Brothers, did go uncommunicative to us. We eventually went to work and realized that we needed to replace the representative. And we did – in fact we did with a much stronger representative, a company owned by Kim Tae Ree Park, who is very well known as an actress and businesswoman in South Korea. The original deal, or to be more precise, the original customer underlying the original deal is still very real and is there.
We are confident we can ultimately do so, especially since we have a more stable representative. We have passed the Korean equivalent of the FDA and we are adjusting the supplement panel for the bottles at this time. Also, when we have the certificate , we will put a translated copy in social media to show our long term investors. It has been mailed and we should have this soon. Although the pricing has not been publicized, We have healthy margins. Given the contract size is millions of bottles, the prospects for profit are well in excess of the indebtedness of the Company. We have continued to devote resources, such as what it has taken to clear the Korean FDA, insurance, bottle markups, etc. So while the delay has been painful for us and for the market, we feel like we are in a good position going forward. While no one wants delays, there are delays in all walks of life, sometimes the delays do result in termination of the plan, but usually common sense dictates that you work through it. Its more complicated in a situation like ours where there have been limited sales and considerable debts, but for the company to not pursue a deal it believes is crazy either with or without these facts.
Some have argued dubiousness because of the delay; at this point, given that the number of established names we have dealt with, be it Warner Brothers, Larry the Cable Guy, United 1 Laboratories, well known auditors and lawyers, and now the addition of well known South Korean actress Kim Tae Ree Park – one would have to question much more than just the Company if they believed we were insincere. The Company has not ever and does not plan to file for confidentiality on its material contracts and accordingly expects to include the Korean contracts in future filings. Given all this, to believe that the company is insincere would doubt the planned Food Factory showing in the coming months, air date to be announced in an upcoming press release, which given the millions of viewers and repeated airings should further weaken the skeptic’s arguments.
Our goal is to build the company and both of our brands and to give our long term investors and the believers the faith they need to know that we are working hard to Git R Done! I’ve also been asked about if we plan to reverse split the shares of the company’s stock. Our answer has been that if it was requested of us to obtain financing, we would reverse split our shares if the deal made sense. No such condition has been presented at this time, so we are not pursuing a reverse split and don't see us doing it at this time nor do the co-founders want to do this. Although the price of our stock is painfully low, the prospects for their increase, a reduction in shorting pressure, and of course improved financial performance through the sales discussed above and the other opportunities we have is such that we believe some recovery will occur. I want to thank all of our supporters and our long term shareholders and believers. We always need your support and your feedback and input
