QUESTION:
- “I noticed the IR firm was not on the latest PR, nor did I receive an email from E and E communications of the PR. Is WB cutting costs or just going with another IR firm.”
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ANSWER:
There are a few reasons. First a bit of background.
I describe IR as two related but different activities; A) Correspondence with, and maintenance of records of, existing shareholders; and B) Development of new (additional) investor relationships, such as through an “investor awareness program”.
The engagement of E & E Communications was our first step toward accomplishing IR goals through contracted services. Naturally, a satisfactory arrangement regarding A must precede B, because increased investor-targeted outward communications would generate an increase of in-bound communications. Condition “A” needs to be well organized.
In order to prevent a conflict of interest, E & E Communications’ compensation is in the form of a monthly retainer, paid as a monthly operating expense, not in shares. The retainer is a fixed amount. The service mandate is to draft or review News Releases, maintain the news disemination procedure, respond to shareholder questions and provide any necessary guidance in becoming excellent in Investor Relations.
Presently the share price is low – less than a penny is definitely too low. This aftects fundraising, if it is to be responsible fundrasing. Winning Brands needs to focus available cash resources on things that have the most direct bearing on the operation of the firm. This is particularly important at the moment – capital raised must not create unnecessary dilution at historically low share prices. E & E therefore has graciously permitted us to enter into an abeyance, for the moment, of its responsibilities until such time that we could catch-up to normal operating budgets. Accordingly, it would not be suitable to refer to E & E in News Releases at the moment.
The second reason is that Winning Brands has an uncommon dialogue with its shareholders, particularly by the standards of our peers in the OTC environment. There is a special frankness and partnership of effort by the company and its shareholders to achieve success together. This can be seen by the extent of communications between the company and its stakeholders, and the detailed nature of the responses. During this critical juncture in the company’s development it is not reasonable to expect a contracted investor relations service to be able to answer correspondence in the comprehensive way that is required to satisfy the many detailed questions that are relevant presently. It is very difficult for even the most professional party in a contract capacity to have the up-to-the-minute currency of information and a sense of how the rapidly evolving operational elements fit together. Therefore, it is more realistic for me to retain direct correspondence with shareholders for the moment. When the firm’s circumstances are more settled and routine, the situation can be more conventional.
Furthermore, there needs to be agreement as to the nature of a modified mandate – and what supportive roles will be part of the big picture as our investor awareness program is planned. Our attainment of the Current Information tier on Pink Sheets and other operational milestones justify greater interest amongst a much wider circle of investors than our relatively small and loyal current group. The company, despite its understandable operating deficit as it builds a new brand, is considerably undervalued. Securites in our speculative category are not best assessed on traditional fundamentals, but rather by the plausibility of dramatic positive changes in circumstances. The goal of any speculative young/junior companies in the public arena is to move from relative obscurity to greater significance based on business developments that are not merely incremental but dramatic. I say this in the full knowledge that my reputation as a conservative CEO within the OTC environment is worth protecting, ie that I don’t exaggerate. Winning Brands is worth more than the current $7 M market cap by the standard of speculative stocks because even our one leading brand alone has the potential to scale up to signficant sales and profitability if the brand “catches on”. When these things happen – if such things happen – it can be rapid. Even one or two good years at a modest level of success has the capability, in our case, of eliminating our debt and enabling a share buy-back to begin. I have never been more confident that this can happen with the current business model. I am confident enough of the direction that we are heading that I intend to get this message out.
Therefore, I am reviewing stock awareness programs that would balance effectiveness with responsibility. That is not as easy as it seems. There are regulatory and ethical issues associated with a successful stock awareness program. Wise and responsible choices are required. The most suitable role of E & E in such a scenario needs to be determined, mutually. It was not possible for Winning Brands to implement an awareness building program prior to attaining the Current Information tier. The regulatory context is clear: adequate information must be available for such a program to be legitimate, as the very first condition. The fact that some firms ignore that protocol is not a standard for our own conduct.
