Stock Tickers: WYDY, HANS, JSDA, KO, KR
The higher-end bottled sport and energy beverages sector is an interesting one, needless to say. After seeing companies like Hansen Natural (HANS-NASDAQ) and Jones Soda (JSDA-NASDAQ) make exponential stock returns it is without any surprise that investors and business people alike peruse the sector to see if there are any stones left unturned. After Coca-Cola (KO-NYSE) paid more than $4 Billion for Glaceau’s Vitamin Water, there are obviously traders looking for more and more of these potential home runs. That is why there is such a wide gap between the winners and the losers in thr group.
After running some SEC filing screens yesterday, an interesting stock surfaced over an investment group having a 13% stake in the company.: Who’s Your Daddy, Inc. (WYDY-NASDAQ/OTC). Who’s Your Daddy is an ‘functional’ energy drink maker that most have never heard of, let alone tried the product (including yours truly). When you look at the website, http://www.kingofenergy.com, you can see what they are all about. It looks like they are targeting the young men and the sports crowd and from how it seems will end up targeting the flashy, young, bling crowd; but it also aims for the ‘supplement’ and some sugar-free alternatives. Both the Chairman and the President are in their mid-20’s.
The company recently hired Tony Seery the former "Trade Development Manager" of Hansen Beverages
(HANS-NASDAQ) to develop more relationships with distributors in Southern California and beyond.
Mr. Seery also worked for Coors and Crest (said to be a Red Bull distributor). Who’s Your Daddy also promotes itself actively via press releases, or at least it appears that they publicly announce each contract and pact signed. In recent weeks and months it has signed the
-Expanded retail distribution into 130 retail Smith’s Food & Drug Stores (Kroger-KR) in Utah, Montana, Nevada, New Mexico, Wyoming, Idaho and Arizona (this morning).
-Beach Volleyball sponsorship in San Diego.
-Sale and distribution through Bashas’ and Food City Supermarkets in Arizona.
-Distribution with Seven-Up in Wisconsin.
-Recent $3.25M financing to pay off all of its short and long-term debt to NIR Group, plus additional working capital.
-Distribution pact in El Paso, Texas.
-Distribution in New Mexico.
You have to keep in mind that all of these deals are going to be very small pacts in the grand scheme of things compared to other sport and energy drink makers, and the company will end up doing far better if it takes the regional approach first because shipping costs can eat all the profits up (there’s a reason for multiple bottling locations around the US for large players).
It sounds like the company has some additional limited financing now, and the question is going to
boil down to just how much more capital it will need. The trick with almost every one of these micro-cap OTC-BB stocks is that they often have high blips in stock trading followed by long periods of next to nothing in share volume. There is also a lot of hype (many press releases and promotion) around these micro-caps with more promise than history. These are often in hot sectors (energy drinks have been).
The truth is that any company with the profile listed here (or same data and different industry) like this could fit the bill of an OTC flame-out where investors feel they should have known better. That doesn’t mean this is the case in this stock, but making some risk disclosure is critical before you even think of trading such a micro-cap bulletin board company. As always with Micro-Cap OTC stocks, you’ll need to do your own research and your own decisions on these. I don’t even like to comment on such things as market cap, shares in the float, financial data, and real highs and lows on a historic basis because some of the data is either old and inaccurate or it is just carry-on data.
Jon C. Ogg
May 31, 2007
Jon Ogg can be reached at email@example.com; he does not own securities in the companies he covers.