Hangover Joe's Holding Corp. (fka HJOE)

[thesmalls]

rough calculations to $5/share

i went through some numbers to get an idea on how many bottles/quarter or revenues/quarter the company would need to do to justify $5/share.

assumptions:
Gross profit - based on best quarter of $775K and cost of product at $345K stays somewhat constant with new contract packager
SG&A stays relatively flat at $650K/quarter
income tax at 40% (no carry through losses)

based on my assumptions, they will break even on a net income basis doing $1.18MM/q in revenues which is 1.52x the revenues of their best quarter.

to get to $0.10 PPS (using a PE of 22 which is the industry multiple) which is where they were trading prior to the freefall - they would need to do $1.64MM in rev/q which is 2.1x the revenue of their best quarter. to put that in perspective - $1.18MM/q gives them break even so incremental growth gives them $0.10/share. they were actually net income positive on the $775K quarter but that was at a much lower SG&A than what they have burned though the last 3 quarters.

to get to $5/share PPS (using same PE of 22), they would need to do just over $24MM/q in rev which is just over 30x their current best quarter. if assumptions are close - that would be roughly 13.5MM bottles/mo or 4.5MM bottles/week. currently - 5HR energy is doing just under 10MM bottles/week.

granted - as they increase production, their GMs per bottle will increase and if they have that kind of growth, the market will assign a higher PEmultiple (2-4x the industry avg). on a proportional basis - that would cut the bottles/week by the same multiple. SG&A will also probably continue to increase as they ramp up to more national advertising (TV spots).

as a more reasonable goal of $1/share - they would need to do revenues of $5.76MM/q which is only 7.5x their best which is very feasible.

i don't expect 2Q13 to be "accurate" of the revenues/GMs from the shift to Ann Arbor as they wont have a full quarter of sales to compare to.

i am hoping the announcement/PR will shed some light on these expectations and/or provide some guidance on what to consider going forward.

anyway - take these numbers for what they are worth. right now it is just looking at what if scenarios based on their best quarter and making assumptions on the gross profit to get a bottle/quarter sales rate and then going back and determining revenues based on sales/production.