GumTech Annual Meeting Notes
The meeting started with the voting for the directors (Boone, Yuan, Jorgenson, Hemelt, Kehoe, Russell) and H. Brown Russell was named Chairman of the Board.
Next, Gary Kehoe gave a brief presentation reviewing the goals from last year and making goals for the next year, then Brown took over and talked about Zicam. Dr.Davidson from GelTech was there but did not make a presentation.
Last Year's Goals:
1. Execute existing contracts with BreathAssure, Ranir, Heritage, Herbalife, BrainGum, etc.
2. Seek new contracts, increase capacity and improve efficiency. This has been done (as described in the recent interview posted last week)- and I went through the plant later - see below. The PharmaGreen contract is very much alive and has 7 lines of gum products; the EcoDent line is doing well and there are at least 1/2 dozen contracts with companies in other countries. At least 32,000 square feet of space has been added, 3 new blister packing lines have been added and warehouse space has been doubled.
3. Increase shareholder value. GUMM is the 3rd best performing company in Arizona this year according to the AZ Republic. He briefly mentioned the Citadel financing but more details have been posted on this board and on the Yahoo board.
This Year:
1. The main goal is to partner with a large company for nicotine gum production and distribution. They would not give too many details but believe that there will be progress that will be announced this year, both internationally and domestically. Production is not a problem - see below.
2. Zicam is doing very well and should be in virtually every major chain drug store and many grocery store chains for this cold season. (I personally think our figures regarding the number of stores that we have posted underrepresents the number of stores that Zicam will be in). Much of the movement of product is this month, September, most in by October and some still moving by November. Dr. Davidson later told me and a few other people after the meeting that distribution simply is NOT A PROBLEM.
3. The relations with some of the other gum lines will continue to grow. Power Gum will have its own website and it will be linked to the company's new website and to the Zicam website. The company should have its new website up and complete by October. [[For those of you who wonder why the Zicam site says "company info coming soon", it is not GelTech that is holding this up, it is GumTech]]
Next there was a question and answer session, dealing mostly with Zicam and issues regarding distribution - things that have been covered here. One of the interesting questions that was asked was if "GumTech had an exit strategy for Zicam". This was not asking about dropping zicam, of course, but how the company might use Zicam, once successful, as an addition to furthering its bottom line while simultaneously raising capital. The three possibilities postulated (of course with no dates mentioned - it could be years - ) are :
1. selling it to a big pharma,
2. IPOing Zicam (?and BioDeliveries) and getting capital for it and for GumTech simultaneously, and
3. Purchasing BioDeliveries' stake
Before anyone makes any wildass predictions about this, rest assured that Gary remains committed to shareholder value and the strategy is quite dynamic because of the unknowns regarding the nicotine business development, continuing dental gum development/growth and the growth of Zicam itself, pending the publishing of the first and second studies, then acceptance in the marketplace (which looks pretty good - Dr. Davidson said Albertson's has ordered over 10 times). Nobody said they had to do any of these things: they could keep things as they are.
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After lunch, I went on a tour of both GumTech buildings, saw the research labs, the production line and packaging sites, and distribution areas. Some people have made fun of the fact that GUMM has specifically mentioned their stainless steel equipment as being state of the art, but it is the fact that it can be cleaned so quickly and automatically reformatted to size different gum pellets that allows GumTech to be much more efficient than competitors in producing several lines of gum using the same machinery and allows GUMM to contract with many different vendors/companies - and get out orders of varying sizes efficiently.
One of the things I found interesting was the viewing of the machinery itself because one can easily understand the level of automation that is available to GumTech AND how quickly they can ramp up production.
IF THEY GET A LARGE ORDER, THEY CAN HAVE IT OUT IN A MATTER OF SEVERAL DAYS TO A WEEK. They currently operate at 10% capacity. This is the high overhead they come to the table with and this is the corporate decision they have made that will provide them with the bargaining leverage. As Gary Kehoe mentioned in his interview, this is what they have done in the last year or so: gotten the production, packaging and storage capacity for truly bigtime partnering and product distribution. In other words, they have built it, so now they (the big boys with quick, large demands) will come.
That is all for now. |
