(AMEX: PRH)
Initiating Price: $1.36
12-18 Month Price Target: $3.00
Current Rating: 4
Decreased Price Target from $3.50 to $3.00 and Increased Rating from 3 to 4 on 06-02-06 (stock price $.75)
VitaCube Systems Holdings, Inc., ("XELR8") d/b/a/ XELR8 Holdings, Inc., is a Denver, Colorado based provider of nutritional foods and beverages designed to help enhance physical health and overall performance. XELR8 has developed a comprehensive line of nutritional supplements and functional foods designed in systems that are easy to take, simple to understand, and conveniently fit within a lifestyle.
XELR8 was formed in late 2000 by founder Sandy Greenberg. "Mr. Greenberg, has over 20 years of business development experience. Formerly serving as Chairman and Chief Executive Officer of a securities firm, he has achieved national recognition for his motivational and sales training activities, and has developed compliance procedures that have become a standard in the securities industry. Mr. Greenberg brings the company his highly accomplished sales and motivational experience, together with his boundless vision. He continues to assist the company with marketing development, the monitoring of athlete endorsements, and the motivation and retention of independent distributors". Through the course of his career, Mr. Greenberg developed a number of associations with professional athletes and others involved in that field. Those associations lead him to the recognition that professional athletes lacked perhaps access to well developed nutrition and supplement regimens applicable to their specific demanding professional endeavors. As a result, he formed XELR8 to address that market, with the notion that at some point he could expand the breadth of that nutrition/supplement platform to address the needs of additional consumers who while not professional athletes maintained active and or exercise centric lifestyles and could benefit from the systems the Company developed for professionals.
The Company spent the next few years building a foundation from which to execute the above strategy. Aside from the science and development required to create the product platform, in June 2003, the Company executed a reverse acquisition with a shell, which essentially brought the Company public. Further, in April 2005, the Company completed a secondary equity offering raising approximately $9.2 million through the sale of 1,500,000 units consisting of two shares of common stock, one Class A public warrant to purchase one share of common stock (exercisable at $4.50) and one Class B public warrant to purchase one share of common stock (exercisable at $6.00). This transaction has provided the Company the capital to move the strategy forward.
As I said, the Company has spent the first few years of its existence building an infrastructure including the product slate, contract manufacturing arrangements, fulfillment, marketing and other critical aspects of the business. This includes its efforts to establish a direct marketing network to sell the products. In turn, those efforts have culminated in the recent hiring of a management team well versed in direct selling, as well as a re-branding and expansion of the product line. In short, the Company has spent a considerable amount of time putting together the pieces necessary to execute the strategy in earnest. As a result of its recent financing, re-branding and management build, I think the Company is at the point where it is ready to see if this boat floats.
My enthusiasm for the Company is predicated on a handful of issues which I delineate in thie full coveragereport, but the general synopsis is, the Company is focused in an industry that I view as highly topical at the present time (nutrition and nutritional supplements), and they have chosen a distribution approach - direct selling, that's proven to be highly effective when deployed with the right products, people and timing. In my view, this combination has the potential to yield highly compelling results.
DISCLAIMER STATEMENT
The information contained in this report has been written by David Lavigne of EdgeWater Research Partners LLC ("Edgewater") and has been derived from sources considered reliable, but cannot be guaranteed by us. Edgewater and Lavigne are not aware of any material conflict of interest known at the time of the publication of this report. Financial projections and estimates herein represent our independent analysis based upon information in conjunction with the Company's publicly available financial statements. Edgewater and Lavigne may maintain positions in the securities referenced, which may change at any time without notice. Edgewater does not receive fees, warrants or any other compensation from issuers in connection with its research. It does however, encourage issuers and it representatives to subscribe to Edgewater's research, and from time to time, issuers and or their representatives may also purchase individual copies of Edgewater's research products. Edgewater and Lavigne may own options, rights or warrants to purchase any of the securities of the Company. This report is for informational purposes only and is not to be construed as specific investment advice or recommendations, nor as an offer to sell or a solicitation of an offer to buy any securities. The securities referenced are speculative in nature and may not be suitable for your specific investment objective. For specific investment advice or recommendations, please consult with your investment representative.
