To OTC Journal Members:
 

Health Sciences Group (OTC BB: HESG) Takes Baby Step

HESG was out today post close with a new distribution agreement and an update on the QVC situation. Unfortunately, the news coming out of HESG is not robust. They are heading in the right direction, albeit at a pace akin to the 405 in LA at rush hour.

The good news first- the company has entered into a distribution agreement with LavazzaStore.com and Aroma Cafe Culture, the shi shi LA coffee company. The LA Lavaza distributor will not start offering SHUGR as it #1 recommended sugar substitute to its customers and clients. The company supports over 1,000 premium espresso machines in the Los Angeles metropolitan area with Lavazza: Italy's Favourite Coffee, and drop ships coffee and tea to over a thousand customers nationwide.

I have no idea how this adds up on the revenue side, but it sure helps on the exposure side. SHUGR needs all the exposure it can get. California, along with Washington, Arizona, Colorado, and Florida tend to be the major trend setting states.

On the slightly negative side, HESG disclosed it was not moving forward with the QVC program at this time, preferring to reserve its resources for other distribution opportunities. This development is a disappointment for myself as I felt QVC would be good exposure for the product.

HESG also disclosed it was closing in on manufacturing its reformulate Sequestrol, and still claims the long awaited infomercial is slated to air in the spring.

Technically, you are looking at the chart of a stock that is under distribution. On the plus side, it has now completed a fairly bullish double bottom. One at the end of '05, and the other earlier this week. This means sellers have had 2 chances to drive it to new lows, and sellers may be fairly exhausted.

The company needs to deliver more corporate events that suggests sales are going to be robust and going to meet the targets they have set out for themselves. Absent better corporate performance, I would expect this stock to continue to struggle.

Guys- we love your product. Get out there and sell a bunch more of it. Give the market a reason to stand up and take notice. Roll up your sleeves, and get to work. I would rate this stock a hold for the time being pending more exciting developments.
 

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