LVVV stock price has been languishing all year, starting the year at 0.14 and hitting lows recently of .01. My opinion of why this has happened is a combination of the company failing to meet expectations, as revenues from the locations already selling the Livewire Energy Chews have not met expectations, and the cash needs of the company.
The latest 10Q SEC filing shows:
Comparison of the results of operations for the six months ended June 30, 2013 and 2012
Sales. During the six months ended June 30, 2013, sales of our products amounted to $55,278, as compared to $109,146, in the corresponding 2012 period. The decrease is primarily attributable to focusing on the education of new brokers and distributors signed on in the fourth quarter of 2012. The new distributors and brokers require approximately a six month lead time to get educated properly on the product, set appointments and engage in sales calls. The company also introduced a new 4-pack packaging option in the first quarter and has been sending samples with updated sales information to all sales channels. The company is confident the newly signed brokers and additional packaging options will result in increased revenue in the coming quarters.
Gross profit. For the six months ended June 30, 2013, our gross profit was $24,031 (43% of revenue) compared to a gross profit of $31,123 (29% of revenue) for the six months ended June 30, 2012. The increase in our gross profit relates to the streamlining of manufacturing and production as well as the Company's concentration on bulk sales which requires less packaging and in turn increases gross profit.
So, in summary, the company has been losing money steadily, and reported sales declines, as it was "educating" new distributors and brokers. With that said, it seems the investing public didn't buy it, and the stock continued to decline with those disappointing financials.
The other factor is the convertible debentures, and shares the company has been using in lieu of cash to pay suppliers and the pro athlete endorsements as seen by subsequent events...
NOTE 13 - SUBSEQUENT EVENTS
The Company evaluated subsequent events through the date the unaudited condensed consolidated financial statements were available to be issued as follows:
On July 10, 2013 the Company issued 2,628,494 shares of common stock as a result of converting four short term notes totaling $54,980.
On July 16, 2013, the Company issued 1,530,000 shares of common stock to two consultants valued at $39,627 ($0.0259 per share) for services rendered charged to operations during the six months ended June 30, 2013.
On July 16, 2013, the Company issued 770,000 shares of common stock to two individuals valued at $19,943 ($0.0259 per share) pursuant to their endorsement agreements charged to operations during the six months ended June 30, 2013.
On July 16, 2013, the Company issued 50,400 shares of common stock pursuant to a common stock subscription dated May 9, 2012.
So as all these shares were issued and were free trading, the receivers of the shares probably decided to sell into the declining market to ensure they got paid for their efforts. Of note, also was a convertible debenture that Asher Enterprises began to redeem by converting almost 7 million shares. This 8K sec filing is at the link below this post. Asher is notorious for damaging company share prices by relentlessly converting and dumping convertibles, regardless of the effect it has on a companies share price.
Soooo, the above paints a rather dismal and bleak picture for LVVV.
So what happened in September 2013 to make me believe it's been a game changer?
CEO Bill Hodson is a sharp man. Mr. Hodson and his President of the company, own over 24 million of the 78 million outstanding shares of the company, and they are hurt more by these price declines, than any other shareholder.
It seems that Bill has finally seen the light, and realizes that it's time for the game plan to come to fruition, and he has implemented the following changes:
First he bought back in a $40,000 Convertible Debenture with CASH. I'm assuming it was the toxic Asher Convertible, as he probably realized that to allow them to convert it at these share price levels would cause severe dilution to all shareholders. It appears the CEO funded this buy back with money he loaned LVVV out of his own pocket!
Second, the CEO and President cancelled the previous salary debt that the company owed them of $460,000 dollars and wiped that debt completely off the balance sheet.
Finally going forward, the CEO and President are only taking $1 per year in salary.
The above actions show that management is dedicated to slowing dilution and to growing shareholder value. Rarely do you find this in what we traders call "Pennyland"
What better statement could he make to shareholders of his confidence in LVVV going forward than that?
Item 1.01 Entry into a Material Definitive Agreement.
On September 3, 2013, LiveWire Ergogenics, Inc., pursuant to agreements with two of its lenders announced that the registrant had retired two convertible promissory notes by paying the sum of $40,000.00 to the two noteholders.
Likewise on September 3, 2013, Bill Hodson, the chief executive officer, and Brad Nichols, the president of LiveWire Ergogenics, Inc., agreed with the registrant to forgive any cash debt that is currently showing as a liability to LiveWire Ergogenics, Inc. regarding their personal deferred salaries to date, the total amount of which is $460,667.00, and shall no longer hold the registrant responsible for payment of that amount.
In addition, Messrs. Hodson and Nichols agreed to change the terms of their employment agreements to a salary of $1.00 per year. All other details of our employment agreements shall remain in full effect.
Then comes the BIG NEWS on Tuesday of this week, the Circle K rollout.
ANAHEIM, Calif. (September 24, 2013) - LiveWire Ergogenics, Inc. (OTCQB: LVVV) CEO Bill Hodson today announced the distribution of LiveWire Energy™ chews in all Circle K locations throughout Arizona.
There are more than 7,000 Circle K sites operating in the US and thirteen other countries. Circle K has become one of the most widely recognized convenience store brands known worldwide for quality products and great customer service.
Stated LiveWire CEO Bill Hodson, "We are excited to partner with such a convenient store giant and we understand the importance of this relationship. Therefore, we've setup and deployed a street-team that will directly support LiveWire sales store-to-store with an aggressive sampling program. It's paramount for customers to experience LiveWire and feel its effect to become a believer that LiveWire really works."
The stock finally responded to all these positive events with a double this week to .03. But, remember, it started the year at .14, down from .25 the year before, and there hasn't been massive dilution. So I believe that there is much more upside to this share price now, and could even see the .10's and higher by the end of the year, as 600 Circle K locations will ensure that revenues are driven significantly higher for the rest of the year.
What makes this intriguing as a speculative investment is the possibility that Livewire Energy Chews may soon be increased to all 7000 of Circle K stores, or to a larger retailer such as Walmart, Target, Kroger, etc... or even another large convenience store chain.
I believe CEO Bill Hodson has a gameplan to rebuild this share price, and he has now delivered the first successful plays and the stock has responded. This could be a nice turnaround story if he succeeds.
SEC Links and chart:
Disclosure: I am long OTCPK:LVVV.