Investors looking for growing companies that have a history of making money may want to spend some time getting to know Panache Beverage Inc. (WDKA). The President and CEO of the alcoholic beverage company, James Dale, has had success in the industry before when he turned 42 BELOW for a $71 million gain by flipping it to Bacardi. With today’s $2.1 million gross financing deal and the distribution deal with SCM Hospitality announced two weeks ago, the holiday spirits sales of Wodka Vodka, Alchemia Infused and Alibi American Whiskey may be enough to reverse the pattern WDKA stock has been on for the last 15 months.
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WDKA Stock Chart
Market Cap: 15.82M
Ytd Percent Change: -70.69%
Ytd Moving Average: 1.1986
Ytd Average Volume: 4,052
Issued and Outstanding: 26,422,891
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The Company announced today the closing of a 12% per annum Promissory Note with Consilium Corporate Recovery Master Fund, LTD which is due in full on December 21, 2015. The proceeds of the financing agreement, before broker fees and other expenses, is said to be $2.1 million, roughly $650,000 more than the amount used by Panache Beverages to fund their operating activities for the nine months ended September 30, 2012 and nearly triple the cash used for the same period in 2011.
The deal also calls for Charles Cassel, responsible for the day-to-day management of Consilium Investment Management, LLC, to join the Company’s BoD. Cassel not only selects all fixed income trades and implements all strategies, both debt and equity, within the confines of the portfolio’s constraints, but has held several key positions in the past such as Head of Emerging Markets Portfolio Management at Standard Asset Management, Emerging Market debt portfolio manager atAmericas Trust Bank and CFO for the U.S. subsidiary of Banco Cafetero de Colombia where he ran the bank’s international treasury book.
With financing in place and a top tier executive now on the BoD, which direction will WKDA stock price go?
Dilution has not been an issue for the alcoholic beverage company. In fact, like a good strong drink which can bump off the competition on the top shelf of a busy bar or nightclub, Panache’s gross profit, although revenues have increased ever so slightly, has made dramatic improvements. During the nine months ended September 30, 2012, gross rpofit increased to $499,303 on sales of $1,310,765 compared to $260,915 on sales of $1,265,671 for the same period in 2011 respectively. During the course of 2012, 120,000 shares of WKDA were issued at $1.00, another 490,000 at $1.25, both with warrants attached to them, and just 440,000 issued for services rendered.
The new distribution agreement is the key to seeing an immediate impact on the top line numbers for Panache Beverage. SCM Hospitality will be placing the Company’s Wodka Vodka and cocktail placements for Alchemia Infused in New York, Miami, Toronto, Beverly Hills and Las Vegas while their Alibi American Whiskey will be added to the bar at the Miami and New York locations. While it isn’t tomorrow that any of these products are going to become threats to any of the top shelf brands, the likelihood of some better than expected revenues in 2013 are cause enough to add WDKA to the list of penny stocks to watch, especially when the 15 month slide finally ends.
About WDKA Stock
Panache Beverage Inc. is an alcoholic beverage company specializing in development, global sales and marketing of spirits brands. In November 2004, James Dale founded Panache as the import company of record for the premium vodka, 42 BELOW which was, at the time, a publicly traded company with little exposure of its product in the U.S. The Company offered the solution by developing a proprietary sales and marketing infrastructure focused on building mass awareness and driving volume. One year later, the brand was in 19 strategically selected states and was outperforming in top tier image accounts.
By mid 2005, 42 BELOW was a major player, replacing Grey Goose in numerous strategic locations, and ranked by Bacardi as one of the top threats to Grey Goose in the U.S. Shortly thereafter when Panache was responsible for over 50% of the total annual cases sold globally, 42 BELOW was formally approached for acquisition and sold to Bacardi in December, 2006 for $91 million.
Click here to view the SEC filings for WDKA.
Bottom Line: Alcohol focused beverage stocks are quite, especially those priced as penny stocks. Optimism of a turn around on WDKA‘s tock price may be a bit too early right now, but with growing sales and new financing, it may be worth checking every once in awhile at the start of 2013 for a reversal.
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