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Gamma Pharmaceuticals CEO Peter Cunningham Releases Letter to Shareholders
Feb 25, 10 09:30AM
LAS VEGAS, NV--(Marketwire - 02/25/10) - Gamma Pharmaceuticals, Inc. (Pinksheets:GMPM-News), a marketing and product formulation company selling its own branded products through wholesalers and direct to retailers, both in the US and internationally, today released a letter to shareholders from Peter Cunningham, Chief Executive Officer, providing investors with important announcements and Management's vision for the company for the remainder of 2010 and beyond.
It is my pleasure to write to you today to bring you details of multiple, concurrent corporate initiatives we are unveiling, which are designed to significantly expand Gamma's global market share and sales revenue in the vitamin, nutritional supplement and consumer healthcare market and, accordingly, the value to you, our shareholders. The difficult economic environment of the past two years delayed several of these initiatives, but also prompted Gamma Management to focus resources and position our products for maximum impact. It is our intent in the weeks and months ahead to provide our current investors regular updates as we execute on these initiatives.
As many of you know, during the past two years Gamma suffered set-backs which delayed our ability to execute the original business plan for the Company. Unfortunately, when our main funding provider defaulted on a substantial obligation to the Company, at the on-set of the global credit crisis, it forced Management to modify certain commercial arrangements and to renegotiate our purchase order and factoring credit facilities; ultimately effecting the execution of our initial strategy and impacting our timeline. However, Management used this period to establish multiple joint ventures, new distribution arrangements, new product formulations and product lines, and expanded marketing relationships that we believe should propel Gamma into an exciting new chapter of success.
In addition, while our customers and manufacturing partners have stood by the Company, Management adjusted its business model to be more effective in this new economy. We have reinforced relationships with our customers (both distributors and retailers), financing sources and manufacturers so that Gamma can focus on its core strengths of marketing and product formulation, creating significant new opportunities and reducing cost of goods by approximately 33%. In parallel, we have addressed the financial opportunities available to the Company. We believe all these initiatives should accelerate our growth and drive substantial revenue gains for years to come.
Importantly, we have entered into a long-term, minimum purchase contract with a leading U.S. distribution partner to market and distribute Gamma products, with contractual minimum set to achieve annualized sales of approximately $48 million.This crucial initiative transforms Gamma from the pre-revenue, pre-EBITDA Company it has been over the past two years into a company with substantial minimum annual revenues, which enables us to look forward with more certainty in anticipating our growth and profitability. Management views this minimum threshold as a strong base upon which to build a comprehensive offering of product lines and brands and to exploit opportunities with enormous potential. As of this writing, our order book contains millions of dollars in purchase orders and a robust order pipeline.
Next week we will announce a global product development and marketing joint venture with a world-famous athletic personality.Gamma is the controlling owner of a global joint venture that will formulate, market and distribute a specialty line of vitamins, nutritional supplements and health related products branded by a world-famous athlete who is revered for his exceptional fitness and stamina. Our initial strategic plan utilizes Gamma Gel Delivery Technology® for four product lines appealing to fitness-minded individuals including serious competitors and athletes. Our contract distributors have expressed high interest in a comprehensive roll-out of this branded product line alongside other Gamma brands, which we will target tens of thousands of retail outlets. We are actively in discussion on additional opportunities to exploit Gamma's expertise in product formulation and marketing, and we intend to opportunistically add business units or joint ventures as our market profile develops.
We have streamlined our balance sheet and reorganized our businesses using Gamma Pharmaceuticals as a holding company for numerous health and nutritional initiatives.Our distribution contracts and support provided by our contract manufacturers, supply chain and retailers have enabled Gamma to organize marketing and formulation initiatives and to reorganize certain debt obligations. We have reorganized a debt obligation with the Jugular license into a joint venture, enabling Gamma to eliminate substantial debt while not affecting Gamma's revenue or profitability. Gamma will continue as a product formulation and marketing company, thereby keeping our fixed costs low and focusing our resources on our highest value-added activities. Management believes this lean, focused approach is critical to maximizing shareholder value.
Our U.S. and global market positions are strong and improving and commanding the attention of retailers and end users alike.We is approached for media, promotion and public relations program launches at prices that are significantly less expensive than even one year ago. We are ready to launch our NBA, NHL, MLB and WNBA arena programs, Gamma Women Forum Series, sampling programs, point of sale and sweepstake programs at the retail level and now we have the distribution partners to keep our products moving through the retail channel. In today's economic environment, we anticipate costs savings on all corporate programs and will selectively seek additional opportunities. Recently, we secured trademark protection in China, and we are on track to expand our business in Southeast Asia including Hong Kong and China.
We have retained a leading middle-market investment bank and national law firm, significantly enhancing our financial, legal and administrative resources.During the past several months, Management has worked closely with its investment bankers and lawyers to finalize the initiatives discussed above. Our advisors have enabled us to more effectively negotiate, structure and execute more sophisticated transactions to drive our strategic initiatives. Further, given the rapidly evolving circumstances of the Company, our investment bankers are actively advising and assisting Gamma in identifying and considering various potential strategic and financial opportunities, including other potential joint ventures, acquisitions and capital raises.
To be certain, challenges remain, as in all businesses. Management has been extremely disappointed in the performance of our equity over the past 18 months, but is committed to driving shareholder value and to making every reasonable effort to ensure that the public has a full understanding of the tremendous opportunities at hand and those that will develop in the future. We believe this is a truly exciting time in Gamma's history.
I would like to close by thanking you for your confidence, patience and commitment to Gamma Pharmaceuticals. Our team has worked diligently to position our Company for future growth and profitability. I know of no other small company that has been able to marshal the resources that Gamma has at this time to enable us to make a substantial push into the market place and indelibly stamp our branded products on the consumer landscape. You can look forward to more frequent communication and we invite you to please contact us at our corporate headquarters should you have any questions or concerns or issues with what I have discussed here today.
I wish you a very successful 2010 and I hope that Gamma can be one stock you brag about owning.
/s/ Peter Cunningham
Forward-Looking Statements: This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements in this Press Release regarding any impact the quotation of the Company's stock has on the Pink Sheets or the lack thereof on the OTCBB, and any other effects of the above are forward-looking statements. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. The Company cautions readers not to place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims any obligation, to update or revise such statements to reflect new circumstances or unanticipated events as they occur.