I have been receiving numerous questions about SFIO since the former CEO was indicted for fraud, so heading into the weekend I want to update shareholders on a few things.
First off, I have finished the consumer survey of the ecig, and it turned out to be better than even I anticipated. I polled 25 people (giant sample size haha), but out of the group not one person said they wouldn’t consider purchasing the product. The main issue arises with the taste of the American filter, because either the Menthol or Virginia flavor was selected as the best taste of the 3 flavors from all of the participants.
This means that the company either needs to improve the taste and aftertaste of the American filter (one user said that they loved the menthol, but the American left a weird aftertaste in her mouth), or heavily promote the Menthol/Virginia flavors to be included in the initial starter kits. I did have a few people that said they didn’t hate the American and that they would use it if there weren’t other flavors, but the Virginia flavor still has a tobacco taste with a soothing aftertaste. I would personally recommend moving the American Filters down to the bottom of the web site (http://www.smokereal.com/pages/Filters-%26-Blends.html), because by listing it first new customers may be led to believe that it is the best/most popular flavor of filters. Overall, this study illustrates a minor problem that can be quickly fixed, but it also shows evidence that the product is well received by the public once it is introduced to them.
That leads into the discussion of marketing, because the nicotine industry is defined by it. Plenty of low quality tobacco items have sold well simply because of a strong advertising campaign, so the company needs to look into an agreement with a high profile figure to promote the product. Both Johnny Depp and Katherine Heigl have been using e-cigarettes in public and on camera, so offering shares in the company to a celebrity (just like OPMG did with Justin Beiber) actually makes alot of sense. The minimal dilution would be more than offset by the increase in market exposure/revenues/attractive distribution offers/etc.
In addition, I think the Board of Directors needs to use their connections to find someone with experience within the nicotine industry to become the new CEO. At this time, the Board of Directors could offer shares of the company to entice an experienced veteran from within the industry to take the position. By issuing shares in lieu of a salary payment, the new CEO would have plenty of incentive to make the company succeed in the short and long term (by increasing his own net worth when the stock increases in value).
On a side note, the company has been/still is still up and running. The website (http://www.smokereal.com/) is still taking orders and processing them quickly. I received a new starter kit with Menthol and Virginia filters three days after I ordered (with free shipping, I expected it to take much longer). I hope that the new executive team is first and foremost dedicated to integrity, because one fraudulent action can ruin the reputation of an individual/company for a long time.
I would recommend Mr. Roth to immediately look into making the company a fully reporting company, because even horrible financials filed through the SEC give any company legitimacy (as far as integrity is concerned). The product is so impressive that as long as the company is dedicated to legally rolling the product out with no strings attached, Venture Capitalists and other investors will begin to seriously consider large investments. Until then, the company needs to focus on shipping new orders as fast as possible, as well as devising a marketing plan that will expose the smoking public to the product.
