From the Chief Executive Officer
Since 1996 Medgen, Inc (MDIN) has gone through periods of tremendous prosperity and lengthy stagnation. In this letter, I will discuss the sections listed below and elaborate on some of the opportunities that will make MDIN great again.
I. We have an outstanding company- we’ve been here and are here to stay.
If you think back over the past decade or two many big brand health nutrition companies have come and gone. Since 1996, Medgen, Inc. (MDIN) has been able to not only survive but also push forward towards a brighter future. As with every industry, ours is not immune to the cyclical nature of business and we’ve had our fair share of ups and downs. Here is why we won’t fall to the wayside like others…
As a company, Medgen is in possession of some excellent brands within the supplement industry. The greatest that comes to mind is SNORenz®. When was the last time you encountered someone who hasn’t heard the name or recognized it from television advertisements or from its prime years where it dominated almost every big box retailer? The brand isn’t only recognized domestically but internationally as well. Add to that, the fact that MDIN has generated over ten (10) million dollars in revenue on that one product alone, which often made up 60% to 80% of the company’s annual revenue. The control of such a brand provides great advantages. For the purposes of this letter, I’d like to specifically reference the cost of customer acquisition (CAC) in establishing why MDIN is such an outstanding company.
Many of the largest brands out there are raising millions, in some cases billions in order to acquire customers. Why is the CAC so high? Customer risk aversion. If a consumer does not recognize a brand they are highly unlikely to purchase their product due to lack of familiarity. It’s difficult to convince a customer to change from one brand to anther. Since 1996, our products have been building familiarity among our target demographic. We have engaged these customers through various means including TV, Internet, and physical retailers. In addition, due to our highly diverse product offerings we can expect our customer lifetime value (LCV) to be higher. Our LCV is also higher because many of our customers become repeat customers. We have products that fulfill various needs and are working to ensure that once we acquire a customer they have zero reason to use anther brand to fulfill their needs.
Within the research & development sector of our company, we’ve been working to come up with greater, more innovative products. We’ve successfully expanded our brand beyond anti-snoring sprays, into bodybuilding products and pet health supplements. We will continue to develop products and fill needs within the market place. We have several new, exciting products that will be released very shortly…some have been previously hinted at, others will come as a complete surprise. These will fulfill old MDIN ambitions, including those of Alternaturals (ANAS.) We are planning to make the exact release dates known via press release shortly and expect to have the first of many new products out within the next few weeks.
There has been some consternation among shareholders that MDIN has not fulfilled promises, yet many of these people are not taking into account, the cost and complexity associated with product development and release. It’s very easy to remember the failures, but successes often go unnoticed. With this in mind, I made it a mission of mine to go back several years and take inventory of all the goals or “promises” made via social media and PR by former Executives. To my surprise all but a few have come fully to fruition. This is not the typical result. In fact what I found is that MDIN is far above the average success rate for a company in our financial range. The fact is that former CEO’s have accomplished most of MDIN’s aspirations on limited budgets with very limited resources. This makes MDIN shine in comparison to the competition. MDIN has not failed in this regard, far from it. If anything we have thrived and continued on through many periods of strife that would put most companies out of business.
II. We are building a stronger balance sheet- with new acquisitions, product development and distribution we are more capable then ever of delivering higher future cash flows.
How does one identify an excellent investment opportunity? For the sophisticated investor this would typically be a cash flow analysis utilizing future free cash flow projections and discounts…at the end you’d arrive at a present value estimate. If that value were above the current market price there would be a pricing inefficiency…which may make it a good opportunity.
We have increased our ability to provide higher future cash flows over the past quarter to make our stock a great buying opportunity. One of the ways we’ve done this is through our recent merger. With the advisement of the Peachtree Group, we were able to acquire many undervalued assets further adding to our ability to generate higher cash flows within the future. These assets came at a discount due to the fact that they could not properly launch at Alternaturals (ANAS) as a result of financing issues and lack of resources, and pre-existing industry contacts…all issues MDIN does not have. This merger also makes great sense due to the fact that MDIN is in a substantially better position financially. We will no longer have delays in product releases due to financing needs. The research and development issues that were experienced at ANAS will be a thing of the past at MDIN. Regardless, we have acquired the entire ANAS brand including: all currently for sale products, development stage products, and any other assets.
MDIN has also acquired the 5 Hour High (5HH) rights. Most recently ANAS had attempted to trademark 5HH, and as many of you have pointed out, application was denied. It is important to know that we have the right to provide evidence to substantiate the fact that 5HH can legally be trademarked, which we will fight to accomplish. It must be noted that this situation is very typical to trademarking, and isn’t a cause for concern. 5HH is one of the top assets within our portfolio and we will work endlessly to utilize it to increase shareholder value. This also does not hinder our ability to continue to develop this product and bring it to retail. We’d like to trademark in order to secure our interests in negotiation. Regardless of the situation, we must push forward as quickly as possible to capitalize on the immense opportunity of 5HH.
To briefly touch on development stage products, ANAS had various development stage products that could not be properly launched for reasons previously mentioned. Our acquisition includes the entirety of these products, which can now be properly launched at MDIN. We’ve developed some products further and through talks with retailers have already received positive feedback…. this has greatly increased our motivation to get these products to retail immediately; thankfully the resources to do this are now available.
A great company should be able to earn progressively increasing net profits over an extended period of time without taking excessive risk. Any company can quickly improve earnings in the short run by taking on excessive risk. We have gone a much safer route and have only improved the odds of MDIN greatly increasing its future cash flow without substantial risk taking.
III. We have a solid game plan and believe our future outlook is very good-as usual this does not come without hard work and perseverance.
Throughout the past decade MDIN has only increased its potential for greater revenue by expanding its product line (only adding to the argument of it being undervalued on the market), yet only experienced steady declines in revenue. How does that happen? Pointing fingers at others is a waste of time and energy; we cannot change the past. Let’s discuss some things we are going to change, and some we are going to keep the same.
With regards to retailers, we are currently listed with a few big names through their websites. We are looking to expand these relationships by introducing our newly acquired products and the ones waiting for release. In some instances, good sales figures online can translate into shelf space in store. As a result of the recent merger, we were able to acquire many of the pending applications and relationships ANAS had culminated…details in regards to these will be disclosed shortly. We are also able to easily introduce many ANAS products to pre-existing MDIN relationships. We will work tirelessly to continue to culminate new relationships with retailers on the online front as well as in store.
We’ve recently targeted not only retailers but distribution companies as well. These connections will allow our product line the opportunity to get into thousands of convenience stores, pharmacies, and smaller retailers. Recent store tests will help us to gather critical marketing data that can be used while presenting our products to big box retailers. On top of this, will also allow us to establish a more diverse revenue base.
In summary, we are working tirelessly to make MDIN great again. We are very confident in the fact that this company can (and will) become a powerhouse again in the near future. With innovations, intelligent strategy, and hard work our goals will be achieved, and we believe we will make MDIN great again!
Thank you,
Matthew Briggs
Chief Executive Officer
Medgen, Inc.