Circle Group Holdings Inc (CXN)

[Rusty00]

Post from jrf30 agracom.com board
Subject: june and July. OUR months
From jrf30
PostID 331950 On Saturday, May 08, 2004 (EST) at 5:33:06 PM
Response To: thrutheroof PostID 331925

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I've been saying that for a few months now. But, it needs saying again. June and July is what we are waiting for right now. Not new contracts, but tie to pass so that the OLD news can come to fruition.

We had a lot of good news early in the year. the deal with nestle's. The infomercial going to be made. the plant being started in IL. that helped us out a lot. but, now people keep wondering why no new news is out. It is becaues it takes time to DO the things alaredy announced. the informercial was annoucned. After the announcment, it had to be written, shot, edited, and produced. Then, it had to be sharpened to the final product. Finally, it had to be placed into slots for TV, and that is not done a mere day or two in advance. All that takes time. So, even though it was announced months ago, it is just now being finished. We should see it ON TV in ... June or July.

The plant was announced. that too takes time to build. It tkes time to get the permits TO build it. To work the design, ramp it up, construct it, and get it going. It will be up and running about ... June or july. It has always been on that timetable. The nestle deal was announced. That was said to start in earnest in June too. It makes me wonder (going into speculation now here) if Greg told them that they could go ahead and start taste tests and even get a contract but that because the plant was not up yet we could not deliver enough Z-Trim to allow the deal to hit the streets before June. Either way, June is when it is expected that ''whatever'' product it is shall hit the streets. I forget where I heard June, but I think greg said it in one of the releases.

See my point? We are not having ''no news''. We are working on EXISTING news. What has been happening since February is that the previous releases are being ACTUATED. The plant IS being built, and those of us that attend the annnual meeting will see it. The contract with Nestle's has been moving forward, and we were told a while back that they have INCREASED the size of the order twice. That is good news. We don't know what it IS yet, but I can live with that. I bet it is a FLOATING contract anyway, and will be changed AGAin as Z-Trim hits the market. Increased MORE THAN two more times. So, it was probably not a dollar amount contract, but a relationship contract. that will GROW over time, as products hit the shelves. Again in june or July.

the infomercial can NOT come out until we can make enough product to support it. So, since the plant is scheduled for June or July, I bet the infomercial starts about two weeks before the plant opens. A guess, but tht is good planning. And, despite what some may think, I think the planing on this has been superb. I'll tell you about that in the next paragraph. For now, the infomerical. I personally think that the profits from the infomercial shall be MORE in 2005 than the profits from the nestle deal. You heard it here first.

Not the revenues, but the profits. I would think that we will sell more to Nestle than on the TV, but the profit margins are so much higher that it would not surprise me to see $3MM in profits from $25MM in sales to Nestle (Again a guess on the size of the deal in 2005) and $5MM in profits from $10MM in sales on the infomercial. PLUS any other contracts athat can be signed after these are figured out and absorbed into our ability to supply them. (and some of you thought the infomercial was a bad idea)

The output needed to supply the infomerical, plus the output needed to suppply Nestle, plus the output needed to supply GourmetCookie.com (let's not forget about them) is MORE THAN WE CAN PRODUCE RIGHT NOW, according to one of the releases greg put out a while ago. Which leads me to my last thought.

The planning and ramping up of a major company. Greg has done this RIGHT. WE are all looking for the next contract. That may not be the right way to look at the upcoming news. If we can not meet the demands of nestle with our current plant that is also producing Oattrim for Quaker, and can't in the near future meet the demands of Nestle AND the infomercial even if we use the output from both the plant we have now (remember it is a pilot plant really) AND the one we are building in Illinois, then WHY GET NEW CONTRACTS? Instead, line them up. get them READY. Then, when ALL THIS NEWS hits us in June and July, take that news and build ANOTHER plant. Maybe TWO more. THEN, we can add more contracts AND meet those requirements of supply. SO, contracts are NOT #1 ''now''. Getting PRODUCTON is #1.

Guys, this is all speculation. But, I've worked with start up comapnies before, and KNOW that this is how it normally works. You have to get a contract to get some revenue and to get interest. Then, you have to build a plant to provide for THAT contract. We are do9ng that with the plant in IL. Then, you can expand from there. But, until we have the plant, I don' think we CAN announce any other big contracts. The infomercial is for higher profit , so we WILL do THAT, but we can't produce enough if we get three or five (or thrirty) more companies asking for product. NOt yet. SO, instead of getting them mad at us, we tell them that we have the product, and that it will be out there on Nestle SOON, and then we will deal with them TOO. make them feel not as important as Nestle? SO WHAT? Nestle's is THE #1 food company in the WORLD. they ARE less implkrtant than Nestle. But, we need to tell them they are important to US. And, we WILL get them product TOO, as soon as we can ramp up enough for Nestle and then get to them. SOund logical? It does to me!

that's my take on it. And, I think that once we get the plant up and running, we can announce more contracts, and WILL. And, then we'll build MORE plants. Wouldn't it be nice if by the end of 2005 we had about 8 plants across the midwest? If we grow SMARTLY, (and I think we HAVE done that so far) then I think it is possible.

So, here's to June and July. I expect them to be GOOD months for us. The fact that we have held $5 per share in May while having no new news AND the market TANKING is GOOD news to me. Going up? Nope, but not a problem. Getting ready for June and July? YEP!!! Let's review the price on August 1st, or August 10th. Then, we'll see if this plays out as I expect. ANd, as i started saying way back in March and early April, when the news started disappearing, and people started worrying. WOrry now, but see the results by AUgust 1.

How's THAT for a guest opinion on what is happening at CXN? I disclaim that this is ONLY A GUESS, but based on previous work with companies that have had a similar path. I am long the stock, and am a bull. I am probably biased. Oh well, that is why I am an owner! I sese good things for our future though.

John