Hints of higher price and valuation for Inergetics, Inc. (OTCBB: NRTI).
A joint press release on August 7th from Martha Stewart Living Omnimedia (NYSE: MSO) and Inergetics, Inc. (OTCBB: NRTI) introduced Martha Stewart Essentials, a new line of “Whole-Food-Based, high quality supplements,” made specifically for woman. The line consists of six products made specifically to address the health needs of woman including products for Hair, Skin and Nails, Bone Support and Menopause Support. The press release said the products would be on retail shelves September 15.
There has not been an announcement by either company to date indicating that the products are now available, but a channel check has confirmed that the Martha Stewart Essentials line of products are available at Walgreens. A store manager confirmed that the Essentials line is being distributed to all Walgreens stores in the United States. Walgreens has 8,096 stores opened in the U.S. as of May 31, 2013 according to its corporate website. This is a strong initial launch for the Essentials line of products.
Inergetics is the manufacturer and distributor of the Essentials line and they have entered into a licensing agreement with Martha Stewart Living Omnimedia (MSO). According to the Commitments and Contingencies section of Inergetics’ 10-Q dated August 14, 2013, the licensing agreement has minimum royalty payments to MSO for the 5 years of 2014 through 2018 of $1,800,000, $2,100,000, $$2,700,000, $3,200,000 and $3,800,000 respectively, on top of the $450,000 paid as of June 30, 2013. If the product line is as successful as expected this agreement will be extended.
It appears the Martha Stewart Essentials line is off to a robust start as Inergetics stated in the 10-Q that they have shipped in excess of $1.4 million of product to retail chains during the third quarter. Inergetics is also launching two other product lines that they acquired earlier this year, Slim Trim and Bikini Ready, but the Essentials line is Inergetics most important product line and most likely makes up most of the $1.4 million of shipped product. The third quarter looks like it will be a real turning point for Inergetics’ revenue growth as the company produced $6,775 and $66,667 in revenue in the first and second quarters respectively.
Inergetics is a company that has been around for some time, but has historically been an underperformer. Inergetics had one product, Resurgex, which was proven to significantly improve recovery time for NCAA Division I athletes in placebo controlled trials conducted by Rutgers University. The product is a superior product, but the management of the company could not capitalize on the product properly.
Inergetics is now in the midst of a corporate restart, which began in June of 2012 when Michael James was appointed CEO of Inergetics. Mr. James implemented a plan to bring proven industry experts into the company to develop and market existing and new product lines for the company. This new management team expanded and relaunched the Resurgex products, acquired Slim Trim and Bikini Ready, and developed and produced the Martha Stewart Essentials line. Mr. James and his team are only now beginning to realize the fruits of their labor.
Inergetics pre-announced their 3rd quarter results in a press release October 1, 2013. Management announced that the revenue for the 3rd quarter would be approximately $1.6 million. The growth in revenue is nearly 24 times greater than the second quarter revenue of $66,667 and 17,000% versus the prior year. Michael James stated in the press release, "We are pleased with the overwhelmingly positive reception of Martha Stewart Essentials into Food, Drug, Mass and online e-tailers. Inergetics' aggressive efforts to drive distribution and product turns across all of our brands are resulting in significant company performance. We look forward to the continued acceptance of our brands as we aim to provide the highest quality products to the growing needs of consumers looking to live healthier and better lives."
Martha Stewart Essentials has the potential for stellar growth over the next few years as it has a full product line of supplements for women, a well-known brand name and support for Martha Stewart Living. The Essentials line also has the potential to elevate Inergetics to a very successful health products company beginning with the large jump in revenues announced for the third quarter. Inergetics is now well positioned for future success and it will be interesting to watch the expansion of the Martha Stewart Essentials line, as well as seeing what Michael James and his team have planned next.
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