Yes, I'm definitely waiting for Eddie's reply, and so don't have much to add in that I won't try to respond to your concerns, but I can briefly outline some of the things that have brought me to my current level of confidence in this investment.
- My first correspondence with Eddie was back in January, after holding for a bit...when things were ugly, like in the .01 range ugly and I was strongly considering selling for a loss just to move my funds somewhere I thought would be better positioned. There wasn't much information then, just a good SS, a nice "plan," and a dream. His response went a long way. It wasn't much, in fact, he stated that he understood the need for investors to position funds as prudently as possible and that it wasn't looking good at the time. He also stated matter-of-factly that he felt they had weathered a horrible economic storm, had survived, learned a lot; the sun was out and it was time for the seeds to start growing. He didn't try to convince me of anything...but his honesty, his confidence, and his transparency made me want to stick around and see what this guy was all about. So I did. SMKY at the time wasn't much for me, not my biggest investment, but then again...it was @ .01
- So I've watched and seen time after time, our CEO has delivered as promised, always. And if there's a change of plans, it's done out of the best interest of the company AND shareholders. I'm sure Eddie will address the dilution concerns, and explain how the financing for the current oven through the lease fund will drastically reduce the dilution that would have occurred if they had done initial financing through traditional methods. My guess is that the terms of future financing whether it's common, preferred, warrants, etc., will also be done in a way that protects shareholder equity as much as possible. Eddie owns a LOT of common stock, the same stock we all own here, and he's fully vested in protecting his own future financial investment.
- I seriously considered selling some of my position here and buying an oven lease unit, and talked to Eddie extensively on the phone and via email about the wisdom of that decision (at the time SMKY was @ .06 and oven lease funds have terms of conversion to common stock at 20x plus some warrants plus a quarterly payment up to an annual cap of 35% I believe)...so the oven fund was incredibly attractive, but Eddie told me he did not think that was wise. So my take on that - selling oven fund units was much more important in terms of starting company operations than my holding onto my position, but Eddie was telling me he thought it was smartest to HOLD my shares! That to me is someone most concerned about shareholder value. He believed (believes) that those shares would be worth much more than 20x in 3 years, and told me so! He also told me a few things that really helped me rest easy, which I'll go into next:
- Debt is a big concern of yours, and rightfully so. Dollarland pointed out that 25% capacity gets us into profitability. Eddie told me that they had a plan that started with WW and also included other retail distributors. The issue wasn't hoping to get someone to carry the product. He told me he could max out capacity instantly. The reason they were being picky, is that they wanted to generate the most profit by dedicating the most capacity to the highest profit margin avenues of distribution. That tells me that worst case, we're still going to be moving product, earnings might just be a little lower. He also told me that his biggest concern was that they might not have enough capacity! That's why financing for additional ovens is so vital. I am fully confident that the use of an additional 5M isn't a wing and a prayer. The previous debt doesn't really bother me. It's there, yes. It will have to be addressed, yes. But, it was accumulated weathering the storm. It's a new game, a new company, a new brand, a new everything now...I don't feel like Eddie spent 10M trying something and is just hoping to throw another 5M at the same thing. I feel the circumstances are completely changed. Does this guarantee success? No, but I feel confident that the plan that's in place now has a very high chance of succeeding. I'm also confident that additional ovens won't be built without having options for utilizing their capacity. That gives me excitement, rather than fear, about the prospect of securing financing and expanding operations.
I realize I put a lot of stock into Eddie. Maybe too much for you. I also realize that the vast vast majority of my holdings were accumulated in the .01-.03 range and if I was looking at entering here I might have more reservations. I would definitely have a different mindset...as I watched this go from a company just kind of dead in the water to actually operational is like watching a newborn take his first steps...it's joyous to the young parents, but to the stranger, looks like a baby that can barely walk while everybody's talking about him being the next track star. So I appreciate the different perspective you and others bring.
Looking forward to Eddie's clarification here.
Cheers.
