Reader Question


What does this poker player, Matt Giannetti,



and these well know pro athletes have in common?


Tiger Woods
 David Ortiz

 The following current or ex pro football players are also involved:


Arian Foster - Texans
Ronde Barber - Giants
Torrey Smith - Ravens
Paul Soliai - Dolphins
Nolan Carrol - Dolphins
Jimmy Smith - Jaguars
Derek Sherrod - Packers
Tyron Smith - Cowboys
Mike Neal - Packers

The answer is they are all sponsors of FUSE. So what’s Fuse you might ask? It’s a drink. The sponsors and the company are touting this stuff as the next Gatorade. The description of the new product from the company's 10-Q is interesting:


Fuse Science has successfully developed sublingual, buccal, 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 GI track and enter the blood stream directly.
The Fuse Science proprietary technology definitively penetrates the mucosa and epithelium to achieve complete and enhanced absorption. It is our firm belief that at this moment we can deliver a wide range of product formulations via these delivery systems such as aspirin, OTC pain, allergy, and cough & cold medications, as well as energy source, electrolytes and many pharmaceutical applications.


This reads like something from Merck rather than an energy drink company. So who is behind this? Some big shots like Coke or Pepsi? Possibly Triad? No, actually the company behind this is, well, not much at all.

Something called Double Eagle Holdings (currently listed in the Pinks - symbol DROP) is the proud owner of FUSE. Some highlights on DROP:

-Last seen, the stock was trading at 43 cents. Up from next to nothing not long ago.

-There are 90 odd million shares outstanding, and therefore a market cap of a lousy $39mm.

-The company has no earnings at all.

-The 10-Q (from June) lists the company’s current liabilities at $507,000, and its current assets of only $300,000. Basically, the company is balls to the wall.

-Because the company has no money, the sponsors are likely getting a ride on the upside with stock. I have no idea what option deals were offered to the big name sponsors.

Let me be clear on a few things. (1) I don’t now, nor have I ever in the past owned any DROP. And (2) I most certainly am not touting this. But I am curious; this is all a bit unusual.

My problem with this is that I can’t believe that a guy like Tiger would put FUSE (exclusively) on his bag unless he actually had tried the drink (and he liked it). If it’s later shown that all these guys are falsely endorsing this product it would them look very bad indeed. These pros are not dumb. They have tons of money and good lawyers. So I’m confused.

I’m not above a "punt" now and then. I was looking at DROP in that vein. After all, the energy drink business will top $9B in sales this year. Sports drinks as a category will exceed $20B. I would appreciate anyone's thoughts on this one.