Chairman's Letter

August 10, ,2007

 

Several major subjects loom high on our Shareholder minds. Before I try to explain our actions, I would like to emphasize the “our” in our actions. Decision making at Med Gen is a serious matter. Much hangs on balance between an action and a result.

As an example, paying down debt. Does anyone think that a lender would continue lending money to a company that pays them back with their own cash? Why borrow in the first place? Paying back the lender is a great idea, but only when the company is self sufficient and can pay back with its “earned” income. In that instance it’s a good idea not to want to borrow again for a long time, at least not from the same lender.

In a company like ours, with two business models and carefully crafted business plans, the game plan has always been to help the lender liquidate debt as quickly as possible. Thus the higher the stock price, the faster liquidation can occur. Since the lender cannot exercise more than 4.9% of the issued and outstanding stock of the company, the price becomes more important than the number of shares.

Although I wish I could say we have been successful at getting our price higher, I have not been able to create enough interest at any level to overcome the effect of day traders and short sellers. The certainty of a higher stock price is real, but only when the company proves its worth in generating positive revenue and creating a higher level of shareholder loyalty.

Numbers don’t lie; calculations indicate that average shareholder investment is less than $2,000.Trading for profits of less than .0005 is commonplace, creating tremendous volume but sideways movement. Since we have over 2500 shareholders, raising the average investment by $8,000 to $10,000 would create $18,500,000 in buying, allowing the lender to liquidate the entire debt by raising the share price to well over $.02 perhaps $.05. Valuation would rise to $48 million.

Whether current shareholder investment increases, or the company is able to attract 5,000 more investors, the result will be the same. It’s just a matter of time and perseverance.

The continuing liquidity of our shares makes a compelling story and an interesting investment. In July, the number of shares traded was over 900 million…. Think about it, almost a billion shares. Easy to buy and easy to sell. Still, we have fewer shares outstanding than many big board companies and less than FedEx when they first came out. Stories about Internet and Industrial or Pharmaceutical giants abound. History has been proven to repeat itself.  

Our company is all about products and people. As your Chairman I represent all Shareholders and as the Chief Executive Officer I am empowered to build a strong company, thus my interests are twofold. At times it seems that the two interests are conflicting, but in the long term they are not. Short-term price hikes without support for long-term value is of little benefit for a growing company. Taking the long term view, although hard to understand and a path that will probably not lead to quick gains, can be supported if that course can lead to sustainable profits and an increasing share value. It is the path I support.

So what happens now? We want to be right in our product offerings. Taking the time and hiring the right people to help us get there is a prudent way to spend hard won money and build confidence with our lenders. On average, 1 out of every 20 Infomercials makes money. I want to better those odds. Taking the time now, testing and re-testing while we have the money to make sure makes sense to me, and I hope to you. If I am right, your ride with me will be wonderfully profitable.

The answer to the question, “what is the real value of our company” can be found in the support we have enjoyed by our lenders and inside investment groups. It can be found in the reason why management has worked for so long for so little, and it can be found in our ability to clearly lay the facts out in filings and releases and still garner the trading support that most companies can only hope for? 

I am constantly reminded of the oldest of all clichés, nobody promised it would be easy!

Paul B. Kravitz
Chairman/CEO