Muscle Flex, Inc
The following article is submitted by a well experienced private investment group(Farseers) members Mr. Nukala and Mr. Sekona closely working with Stockshaven Investments, which conducted a recent conference call with Danny Alex the CEO of Muscle Flex Inc. Mr. Nukala is also a member of Cohen Investment Group, http://www.cohenresearch.com with more than 8 years of investing experience.
Muscle Flex, Inc., a specialty marketing firm, which is focused on bringing new consumer health and fitness related products to market is a unique and highly undervalued Company. The Company is developing infomercials and advertorials to directly market its innovative products specializing in the health, fitness, wellness and hygiene sectors. Muscle Flex is operating a platform business model where it outsources manufacturing and call center operations, and partners with media producers to create the direct marketing infomercial. This business model enables the Company to keep expenses low while launching new products. The inherent low fixed costs in the business model reduce downside financial risk while enhancing profitability.
Top Research Analyst, Paul Cohen, initiates Coverage of Muscle Flex Inc. (MFLI) with a “strong Buy”. A 31-page research report written by one of the nation’s highly respected and leading micro-cap research firms, Grass Roots Research and Distribution, Inc founded and led by Paul Cohen. A very detailed report on Muscle Flex is available for download at http://www.grassrootsrd.com/mfli-report.pdf or by visiting www.grassrootsrd.com
(Analyst Credentials: Paul Cohen is also the founder of Cohen Independent Research Group which is Wall Street’s #1 Independent Research Firm. As founder of Bear Stearns Western Regional Offices, Paul Cohen was one of the original 12 Dirty Dozen analysts, regarded by many to be the top 12 security analysts in the nation. Mr. Cohen was also the West Coast Senior Vice President of CBWL-Hayden Stone-American Express. Mr. Cohen’s partners are Sanford I. Weill, past Chairman and CEO of CitiGroup and past Chairman of Solomon Smith Barney, and Arthur Levitt, past Chairman of the Securities and Exchange Commission (SEC). The group covers 9,000 public companies. For more information, readers can visit the company’s website at cohenresearch.com)
The very conservatively projected revenues for MFLI are expected to be $500,000 in 2009, quickly growing to $10 million in 2010 and doubling thereafter to $24 Million. Grassroots used a DCF analysis to calculate short term price target and a PE analysis to define the intermediate and long term price targets. The Sponge Tech Delivery Systems (OTC:SPNG) business model is similar to MFLI.PK. Sponge Tech recently announced it secured approximately $6.4 million in new orders for the month of June. SPNG.OB common stock in a recent investor awareness campaign, traded between $0.01 and $0.29 cents. The analysis estimated the short term MFLI.PK price target of $0.22 as appropriate when compared with SPNG.OB
MFLI price targets by Grassroots analysts
Short Term $0.22
Intermediate Term $0.58
Long Term $1.50
Total Outstanding/issued shares for MFLI: 120 Million
Current Market Capital: $1.2 Million
As Seen on TV Market
“As Seen on TV” direct response industry is a $150 billion market which has been booming throughout the national recession as described in a recent report on CNBC (http://www.msnbc.msn.com/id/30308356/). The Snuggie sold over four million units in six months and the Spongetech Car Sponge, publicly traded on the OTCBB under SPNG, posted $13 million in quarterly sales thanks to a single product infomercial. Muscle Flex Inc. with its various trademarks and a list of growing products is actively seeking to expand its market share in this $150 Billion dollar market and preparing the ground for its direct response TV sales as early as this month.
The first line of products scheduled to launch in the second half of 2009, starting with the infomercials and advertorials for its first product(Vitamin Buddy) as early as next week, are very inexpensively priced and innovative personal health and safety products. The Company is focusing on lower priced products initially due to the weak economic environment. In early 2010, the Company is going to launch the Muscle Flex™ product, a revolutionary in-home fitness unit that combines strength and flexibility training along with a cardiovascular workout. This is the first personal fitness product that combines the benefits of all the three aspects of fitness. The company is also working on various other products and fitness machines which are in prototype stages.
By outsourcing much of the operational functions, the Company can focus on leveraging its intellectual capital by (1) identifying new personal health and fitness related products that can benefit from direct TV marketing, (2) designing infomercials and advertorials that clearly convey the products benefits, (3) effectively marketing the infomercial, and (4) creating a healthy lifestyle pilot program. Designing infomercials may include the use of a celebrity as the infomercial MC, and/or may highlight endorsements by celebrities. The direct marketing advertorials are 30 seconds to 5 minutes long, and the infomercials are 20 to 30 minutes.
The mastermind behind Hollywood’s most sought after gifting suites, GBK Productions, has invited Muscle Flex Inc. to participate in their exclusive Hollywood and event-driven gifting suites, which include The Golden Globes, The Oscars and The American Music Awards to name a few. The relationship with GBK Productions forms an integral part of Muscle Flex Inc.’s strategy of launching new products with intensified media exposure and allows for potential endorsement deals, testimonials and participation by some of Hollywood’s most visible celebrities in helping to establish Muscle Flex brands.
GBK Productions invites only selected companies and products to attend their high profile gifting suites and seeks to connect today’s hottest celebrities and personalities with new and exciting products to create an industry “buzz” and national media exposure for companies showcasing their products at their world-class prestigious events. GBK Productions (www.GBKProductions.com) is the premier company engaged in putting on some of the most prestigious events and gifting suites in Hollywood which include: The MTV Music Awards, The Golden Globes, The Oscars, The American Music Awards, Cannes, the Sundance Film Festival, the Emmy Awards as well as the Superbowl, and many others. “Muscle Flex Inc.’s suite of products has that exciting, large market potential and celebrity appeal that can work extremely well in the high-profile gifting shows and Hollywood events,” commented Gavin Keilly, President of GBK Productions. “GBK presents some of the most prolific and sought after Hollywood gifting events. Muscle Flex Inc. and their suite of products is always a welcome addition to the lineup.”
The Companies Board of Directors has recently confirmed its plans to transition the Company to a fully reporting company listed on the OTC Bulletin Board (OTCBB). The Board’s intent is to provide the highest level of corporate accountability and visibility for Muscle Flex, as well as significantly expand the market for the Company’s stock. At present, Muscle Flex Inc. is a “Current Filer” on the Pink Sheets.
The Vitamin Buddy™ is a portable vitamin / pill box that has adjustable timers to remind the consumer when to take medication. Each Vitamin Buddy™ has three separate timers that can be adjusted for different time intervals. The Vitamin Buddy™ beeps when the previously set time occurs. We believe this device can be highly valuable to an aging population. The Company pans to market the product at two price points, $9.95 and 14.95, with a buy one get one free offer.
Muscle Flex Inc. announced that its initial market research of its “As Seen on TV” product, The Vitamin BUDDY Tablet Caddy™, exceeded all expectations on desirability, functionality and projected product acceptance. Muscle Flex® conducted an informal research study of its “As Seen on TV” product, The Vitamin BUDDY Tablet Caddy™, which employed a series of questions designed to determine the potential response from a diverse range and random sample of consumers. The results were exceedingly positive in that the majority of people surveyed said they would purchase The Vitamin BUDDY Tablet Caddy as a TV product offering. The results skewed even more favorably when the full “As Seen on TV” Vitamin BUDDY Tablet Caddy offer was told to them at the conclusion of the survey resulting in excess of an 87% favorable purchase rating. The expected television release of the Vitamin BUDDY Tablet Caddy infomercial is late September 2009.
Market for Home Fitness
The Sporting Goods Manufacturers Association reports sales in the US of sports equipment and apparel was $66.4 billion in 2006. According to the Mercanti Group, approximately 43 million Americans belong to health clubs. Revenues from health clubs are over $17 billion annually. Americans are clearly willing to spend on their physical health needs. The aging baby boomer population has been far more focused on healthy living practices in older age as compared to older generations. It is estimated that up to 65% of the US adult population is overweight or obese, and yet, spending on new diet fads continues. More Americans are becoming aware of the need for healthier living including low impact exercise that leads to a higher quality of life. In the last several decades, the baby boomer generation has provided an increased emphasis on personal health. The trends of more health clubs with treadmills, stationary bikes, and other aerobic devices and the popularity of workout regimens including weight machine and free weight training, all occurred to meet the health requirements of the baby boomers. Several in-home fitness products sold through infomercials have performed very well. The Bow-Flex strength training, which sells for up $5,000 per unit, has generated over $1 billion in revenues. The Total Gym, which costs up to $2,000 per unit has generated revenues of approximately $2 billion. The Nordic Track set the record for the highest number of personal fitness units sold in one month through direct advertising at 350,000 units. The direct advertising marketing channel has clearly shown that it is effective for home fitness equipment.
The Flagship Product – The Muscle Flex™ Home Fitness Unit
The premier product the Company will market is the Muscle Flex™ Home Fitness Unit. This is a
revolutionary home fitness product because it combines cardiovascular workout with strength training and flexibility. The importance of flexibility and strength training during the aging process are well known, but these benefits are more recently documented than those of cardiovascular work. Due to the products unique capacity of providing all three, it is called the “Natural Fountain of Youth™.” Using the Muscle Flex™ improves lateral strength and flexibility while providing a cardiovascular and upper body workout. The lateral movement is critical in opening up the hip joint rather than just moving hip muscles front to back. Without lateral movement, people feel less mobile with age. The Company plans to position the Muscle Flex™ product for improving the quality of life even as we age. The loss of mobility that typically occurs with the aging process does not need to occur. The Muscle Flex™ improves the quality of life by improving the range of motion and keeps joints strong and flexible. The Muscle Flex™ uses the “resistance out / resistance in” principle. With its multiple tension settings, the user pushes against resistance and then pulls against the same resistance. The leg pushing and pulling builds strength and flexibility.
Due to the product’s versatility, it is appropriate as a self contained fitness unit and as a warm up device before an extensive workout or martial arts session. It is complimentary to many exercise programs, including yoga, pilates, and any weight training or cardiovascular training regimen.
The Muscle Flex™ was debuted at the high-profile GBK Emmy Awards Gifting Suite in September 2008. The product was well received and several celebrities became fans including Kevin Sorbo, Randy Jackson, Joe Fatone and Cloris Leachman. After the product introduction, Danny Alex, CEO, made some significant modifications to improve its effectiveness. The infomercial for the Muscle Flex™ is scheduled to launch in late 2009 and will feature Monica Brant, the International Federation of Body Builders (IFBB) Fitness Olympia Champion and Danny Alex, the Company Founder and CEO. The base product will be priced at$399 and at $499 with all accessories. Analysts believe the Muscle Flex™ will appeal to a wide audience. Its low impact benefits address the older baby boomers and overweight users. Even high level cardiovascular exercisers such as long distance runners or bicyclists can benefit from its lateral flexibility features.
Danny Alex, CEO of Muscle Flex announced last week that it has been exclusively invited to the WWDMAGIC (www.MagicOnline.com) fashion tradeshow in Las Vegas by Houston PAD (www.HoustonProjects.com), Master Distributor of VATA Brasil Active Wear (www.VataBrasil.com). The invitation to attend WWDMAGIC comes as Muscle Flex Inc. is preparing to add its Muscle Flex® sports and active wear product line as one of its flagship products. Additional details are expected in the coming days. The WWDMAGIC fashion tradeshow represents the full fashion spectrum where women’s wear is concerned. Its unique show within a show platform allows the world’s retailers to survey and shop the entire marketplace with ease. Thousands of WWDMAGIC exhibitors represent women’s sportswear, junior, contemporary, casual lifestyle, lingerie, swim, accessories and footwear categories and an unrivaled number of buyers across the globe turn out show after show to shop them! The WWDMAGIC tradeshow is one of the biggest of its kind. Muscle Flex Inc`s portfolio of trademarks provides the company with significant leverage in maximizing sales and distribution channels and hence, brand optimization.
“The Muscle Flex sports and active wear product line is going to have an absolutely exciting and inspirational feel, In the coming days and weeks we are going to let investors know the full breadth of where the Muscle Flex sports and active wear product line is heading and I have no doubt that investors will be incredibly excited as to its potential… this is going to be a HUGE product line for Muscle Flex!!” commented Danny Alex, CEO of Muscle Flex Inc. “It has the right mix of sex appeal, comfort and inspirational designs that will really make an impact in the entire sports and active wear industry. We have so many things already planned with the entire Muscle Flex active wear product line and the WWDMAGIC tradeshow is going to be an amazing prelude into launching this product category for us. ”
The Company is also in discussions with an entertainment production company to co-develop a pilot program that is designed for prime time/daytime television. The program will deliver real life practical solutions to those seeking a healthy lifestyle. Topics will include sugar free recipes, exercises and how to maintain healthy meals while at work events. Guest celebrity appearances are planned to add variety. Muscle Flex anticipates introducing additional personal health and safety products through this program. Some of the potential new products include vitamins that are branded with Muscle Flex, a smaller version of the Muscle Flex product, and natural hair removal products. The Company owns the Canadian trademark “In the Raw®”, acquired from Danny Alex in 2008. The “In the Raw®” is registered to distribute products for extreme sports, In the Raw® T-shirts, caps, and CD’s. Muscle Flex is in discussions to create a pilot program for prime time TV and/or cable about healthy lifestyles.
Muscle Flex Inc. won its “In the Raw®” trademark against the World Wrestling Entertainment (WWE, a $1.3 Billion Company) “RAW” trademark application 1,1508,018, which ends a multi-year dispute between the “In the Raw” and “Raw” trademarks in Canada. On June 18, 2008, the CIPO (Canadian Intellectual Property Office) issued a final decision that found certain wares listed in the WWE “RAW” trademark application 1,153,018 were confusingly similar and thus lacked distinctiveness from the “In the Raw” registered trademark of Muscle Flex Inc. Muscle Flex Inc`s portfolio of trademarks provides the company with significant leverage in maximizing sales and distribution channels and hence, brand optimization around the world. The company plans to continue to protect and strengthen its intellectual. It will also use “Your Workout Starts Here”, “Extreme Machine” and “Muscle Flex” in marketing the Muscle Flex products. Additional trademarks owned by the Company that carry the ™ symbol are “Vitamin Buddy”, “Magic Clippers”, “Securo Marker” and “Natural Fountain of Youth.”
Conclusion and Overall Sentiment
With a very clean balance sheet(please refer to the Grass Roots detailed article) and just 120 Million outstanding/issued shares of which a little more than 50 million floating, MFLI is being stably trading around $0.01. The total market capital of the company stands at just little over $1 Million indicating room for an exponential growth, given their product line ready to hit the $150 Billion industry through a proven means of marketing, innovative programs and hot trademarks well received over the entire sports industry. We feel the conservative and baseline estimates provided by the grassroots organization are low given the fact that the analysis does not take into account the many of the other new products/programs(example: the active sports wear product line, a new fitness equipment in prototype stage..etc.) which were recently announced. The PPS can easily surpass the optimistic case estimates which are well above the $0.22 short term(Dec ’09), $0.58 intermediate and $1.50 for long term. Given the facts and analysis described we feel that this is a very compelling investing opportunity for everyone short term as well as the long term investors.
———–Disclosure: Mr. Nukala has a long position in MFLI