Shareholder Question: News Release

QUESTION:

  • “…Perhaps now would be a great time for some type of press release to bolster the feelings of the investor and the share price…”

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ANSWER:

That’s an understandable comment.  The idea behind it no doubt is that more news would help the company’s current low share price.   The share price is not helped by News Releases, it is helped by news of substantive positive developments.  There is a big difference between the two.  It would be an insult to the intelligence of all parties concerned if the company were to simply churn out material for the sake of it.  The reason that it would be a futile exercise is that the “market” is far more sophisticated than that.  The current market capitalization of the firm is in the neighbourhood of $4.6 Million because “the market” feels that this is an appropriate valuation given the challenges we face and the upside that we have.  Aside from being of questionable ethics to simply “pump” the stock, it is a vast underestimation of the savvy in the market.   Issuing News Releases for the sake of driving up share prices is the equivalent of firing blanks because it requires statements that make a big noise but have no real substance.  Does anyone recognize the look of News Releases touting multi-million dollar transactions that never come to fruition?  It’s a practice that is seen for what it is and pulls the rug out from under itself because of its circular purpose.

What will increase the share price, sustainably, so that current investors can sell their holdings at a terrific capital gain, is the combination of a justified perception by “the market” that Winning Brands is worth more than its current market cap and technical factors, such as a reduction in reliance on share issuance for financing. 

A positive consequence of our demonstrated commitment to building a brand success, is that we are gaining credibility with persons who wish to invest in the company, despite the current setback in the share price.   My preference would be to reduce Regulation D, Rule 504 financing in favour of suitable debenture financing, with no conversion feature to equity for a full year.  That technicality by itself would be far more beneficial than issuing News Releases for the sake of it.  That is because the supply of shares entering the market would be greatly reduced at the same time that the company’s business has the most potential to hit its stride in the USA.   A shift in focus from the one mechanism to the other is beneficial for everyone.  It benefits current retail shareholders by diminishing the arrival of new shares into the market.  It benefits Regulation D, Rule 504 accredited investors by fostering conditions which reward holding shares for investment intent, it benefits company personnel by permitting more focus on the business of the company, etc.  However, debenture investors require comfort that the company has a legitimate and plausible business plan so that they would wish to convert their interest into to an equity status  following year knowing that share prices are not manipulated.

Therefore, the firm will continue to issue News Releases, subject of course to the consent that it receives from third parties being named, but the firm is also commited to much more fundamental and sustainable practices that support the company’s perceived value and legitimacy.  It is precisely because the company has been so solid in its operating style, and refuses to engage in “games” regarding its share price, that we are being brought to the attention of individuals who would be suitable (and financially capable) debenture holders.  

In the meantime, as C.E.O. with a bird’s eye view of all the factors affecting the company, including discussions with prospective accounts – and my knowledge of our challenges of every type – I have never been more confident that we are going to succeed in a big way.  It takes true grit at the moment, I am well aware of that.  That’s why this sector of the investment market is not for everyone.  It’s for the tough minded, strong and self-confident.   That’s exactly why we have a relatively small number of very capable “longs” holding sizable positions.  They understand the goal, the method and the advancement that we are making operationally and what it is likely to mean for the share price in due course.

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