While FUSE Science, Inc. (PINKSHEETS: DROP), formerly known as Double Eagle Holdings, Ltd., has been busy telling investors about their partnership deals with high-profile athletes like Tiger Woods, David Ortiz and Arian Foster they have remained relatively quiet about a few key developments that could have a dramatic effect on shareholders. While DROP’s trading volume has already exceeded the 8.4 million mark on Monday, well ahead of the 2.9 million that traded hands on Friday, there has been little shift in the company’s share price, essentially holding steady in the mid-0.40′s with a few spurts pushing that price to as high as 0.54.
It would seem likely that a company that had inked deals with some of sports biggest names would see their share price jump just off of the publicity but in the case of DROP getting their share price higher is going to be a difficult task. The reason they will have such a hard time is simple, dilution.
In a November 23, 2011 filing DROP announced the approval, authorization and adoption of a number of amendments to their Articles of Incorporation. Among the most impactful for shareholders: “increase the number of shares of common stock which the Company is authorized to issue to 400,000,000 shares from 100,000,000 shares,” and “increase the number of shares of preferred stock which the Company is authorized to issue to 10,000,000 shares from 12,500 shares.”
DROP seems convinced that they can still create something of worth to investors as company CEO Brian Tuffin has stated “We have advanced our technology platform in a way that we expect will change the rules of the game in several major pharmaceutical and OTC categories and the recent announcements of our partnerships with Tiger Woods, David Ortiz , and Arian Foster , are indications that we are in this for the long haul, and focused on delivering long term shareholder value. Without exception we are taking deliberate daily actions to cross every t and dot every i to ensure the highest realization of value for shareholders.”
This technology platform is designed to accelerate conveyance of medicines or nutrients relative to traditional pills and liquids and can enhance how consumers receive these products. The company has remained firm in their belief that they have “sublingual and transdermal delivery systems for bioactive agents that can now, for the first time, effectively encapsulate and charge many varying molecules in order to produce complete product formulations which can bypass the gastrointestinal tract and enter the blood stream directly. This is done in a concentrated “DROP” form that is simply applied under the tongue.”
While DROP has been highlighting their recent partnerships with athletes the company believes their technology can extend well beyond the playing field. Tuffin has said the company’s proprietary technology “can effectively produce aspirin in ‘DROP’ form, OTC medications, energy and electrolyte products, sleep aids, appetite suppressants, pharmaceutical medications including enhancement products like Viagra and Cialis, along with children’s vitamins and complex nutrition products.”
For the moment FUSE Science is concentrating on the world of athletics and trying to advance the launch of four products designed to “naturally provide the competitive advantage athletes need to maintain peak performance and make that pivotal play down the line when it counts.” Their first product release is EnerJel, designed to remedy active muscle fatigue through hits application as “a real-time anti-inflammatory and energy source applied directly to the problem area to help athletes finish the game.”
The EnerJel product gained DROP the partnership with Ortiz but the difference maker for the company could be the deal with Woods as the former number one golfer in the world will soon be displaying the company name on his golf bag. Given the fact that Woods still enjoys considerable television coverage during golf tournaments DROP should receive tremendous exposure from the deal.
It should be noted that Double Eagle only recently acquired FUSE Sciences and prior to the acquisition and eventual company name change Double Eagle had a history of struggles. While they were incorporated under the name Future Tech, Inc. back in 1988 they have held the name Aqua Australis, Inc., Network Systems International, Inc., and Onspan Networking, Inc. all before Double Eagle Holdings, Ltd. Needless to say they did not find financial success under any of those names.
The real problem for investors is the increase in issued and outstanding shares that comes with the name change to FUSE Science. Obviously DROP will have to compensate these athletes for their endorsements and the company certainly doesn’t have any money to do that so they are offering a chunk of shares for their kind words or willingness to carry the company name on their gear. Unfortunately the increase in shares is not building much value for those shareholders who have been around for awhile and unless DROP can find their way into those additional markets identified by Tuffin then it’s unlikely that the company’s financial future will be any different than its past.