Minerco Resources Chairman & CEO Issues Letter to Shareholders Regarding Q3 of FY 2015
June 25 2015 - 9:30AM
Minerco Resources, Inc. (OTC:MINE),
the
parent company of Level 5 Beverage Company, Inc. a specialty
beverage company which develops, produces, markets and distributes
a diversified portfolio of forward-thinking, good-for-you consumer
brands issued a letter to its shareholders from Chairman & CEO,
V. Scott Vanis today. The letter follows:
Dear Shareholders,
As most of you know, we just filed our Form 10-Q for the
quarterly period ending on April 30 of this year. Frankly, it's a
mix of good news but also missed expectations. My job is to
shed light on the facts and that's what I pledge always to
do. That said, our trajectory of progress and achievement in
less than one year is solid. We continue to be confident that
our overall growth strategy of accumulating greater equity holdings
and value for shareholders is the correct course and is leading us
to our goal of upgrading to a listed exchange.
I would also like to thank you for your patience in regards to
the timing of this update. I wanted to be in the position to
affirmatively state that, as of yesterday, we have started the
process of returning common shares to the company treasury.
Additionally, I can now also definitively state that we believe our
current share structure will be suitable to see us through to the
next step in our growth, expansion and evolution. After more than
six months of planning, consultations and meetings with financial /
banking partners, the generalities of this coming move are
finalized. However, the exact mechanics are still being sorted out.
In our customary fashion, the mechanics of the next step will be
advantageous to our shareholders, and we will let you know the full
story after the details are locked in.
Here's my quick evaluation of the ups and downs reflected in
this latest 10Q:
The ups -
- Assets are up to $3,511,368 (up approx. $800K from January 31,
2015). This increase is due mostly to our acquisition of branded
cash flowing assets, such as our increased ownership of Avanzar
Sales & Distribution and VitaminFIZZ, as well as from interest
accruing notes receivable.
- Derivative liabilities are down more than $700K quarter over
quarter. We are consistently working to reduce our overall debt
burden. This is essential for Minerco to evolve from a small
cap to a listed exchange. The detailed procedure of clearing out
the remaining debt has been initiated, and we plan to provide
updates on this topic as we reach closure.
- The company is now fully divested of its last remaining clean
energy projects, including hydro-electric and wind. Purchase
price was in the form of the assignment of over $32k of Minerco
debt (which is no longer our obligation) as well as receiving an
interest accruing note receivable of more than $680K. This
transaction adds more than $700K in gross assets to our balance
sheet. Now we have completely cut the cord with our former line of
business and are now completely focused on the beverage industry
and taking our flagship product, VitaminFIZZ, to a national market.
- Incremental revenues are up $33K year-over-year, with well over
$600k in sales for the quarter. This increase is a net result
of increased VitaminFIZZ sales counterbalanced by lower sales
numbers from other Avanzar products due to seasonality.
- VitaminFIZZ is consistently building sales momentum in its
domestic test markets and has only just now arrived in the
UK. VitaminFIZZ booked revenues (as of 4/30/2015) increased by
approximately 60% quarter over quarter (excluding double booking
with Avanzar). This increase does not accurately represent the
rapid expansion of VitaminFIZZ. The addition of numerous new key
accounts, many of which we leveraged inventory in lieu of cash to
open, increased product sales and placement in Q2 (ending
4/30/2015) by over 500% (excluding Walgreen's promotion) in Q3.
This is the critical benchmark of VitaminFIZZ progress: marketplace
performance.
The downs -
- Quarterly gross profits are down YTD due primarily to the
promotional and advertising costs of entering VitaminFIZZ into new
key accounts and markets. Promotion is a necessary investment
spend in any business scenario and absolutely essential for an
early stage product like VitaminFIZZ.
- An increase in total liabilities, quarter over
quarter. This is a result of the traditional debt we took on
to be able to execute on our strategy of vertical integration, and
expand our equity ownership of branded cash flowing assets such as
Avanzar and VitaminFIZZ.
- Revenues are down, quarter over quarter. For Avanzar,
February through April is the slowest sales season due to
seasonality and inclement weather. This phenomenon held true for
Avanzar the quarter ending 4/30/2015. However, as mentioned above,
this trend was not true for VitaminFIZZ, which sold and placed more
product in Q3 than any quarter since its launch.
- Since the end of the quarter, we also took an additional
Debenture to continue to fund our vertical integration, expand
equity ownership but mostly to quickly cover an emergency /
increased production run this month to supply our newest key
account. Regarding this newest key account: we expect it to be our
game changer based on the path taken by the category leader in the
VitaminFIZZ space.
Even though we interpreted some of our quarterly numbers as
below expectations, I hope you can see, as I do, that the mixed
messages of our latest 10-Q are a result of the normal vicissitudes
of doing business. For our company, business is good and value is
being built. For our shareholders, we believe the evolution of our
company will finally deliver the true value of your loyalty,
support and investment. Personally, I have never been more
convinced that our robust progress to date is only the beginning of
building a progressive, world-class company.
As always, my thanks for your confidence and support.
Sincerely,
V. Scott Vanis
Minerco's Chairman and CEO
Minerco
Company Background: Minerco
Resources, Inc. (OTC:MINE) is an emerging growth company
specializing in the food and beverage industry. Its portfolio
of companies include Level 5 Beverage Company, Inc. (Level 5),
Avanzar Sales & Distribution, LLC and The Herbal Collection™.
Level 5 is a specialty beverage company that develops, produces,
markets and distributes a diversified collection of
forward-thinking, healthful consumer brands. Level 5 brands include
VitaminFIZZ®, Vitamin Creamer® and Island Style™.
http://minercoresources.com
Safe Harbor Statement: This
document contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Act of 1934 that are based upon current expectations or
beliefs, as well as a number of assumptions about future events.
Although we believe that the expectations and assumptions upon
which they are based are reasonable, we can give no assurance that
such expectations and assumptions will prove to have been correct.
Some of these uncertainties include, without limitation, the
company's ability to perform under existing contracts or to procure
future contracts. The reader is cautioned not to put undue reliance
on these forward-looking statements, as these statements are
subject to numerous factors and uncertainties, including without
limitation, successful implementation of our business strategy and
competition, any of which may cause actual results to differ
materially from those described in the statements. We undertake no
obligation and do not intend to update, revise or otherwise
publicly release any revisions to these forward-looking statements
to reflect events or circumstances after the date hereof or to
reflect the occurrence of any unanticipated events. Although we
believe that our expectations are based on reasonable assumptions,
we can give no assurance that our expectations will materialize.
Many factors could cause actual results to differ materially from
our forward-looking statements.
CONTACT: Media Contact:
W. Jason Grimley
Spelling Communications
323-309-8714
jasongrimley@spellcom.com