QUESTION
I must say I am quite impressed with you and your teams effort as far as getting our product in stores, if we do not succeed it wont be because you are not working, with that I thank you. I am curious though if I could hear your thoughts and the current pps, why do you personally feel it is so low? I realize you cant give your opinion on stock but looking at your company as an analyst would you feel confident in the future? Also do you know the exact date financials for Q3 are due? And will they be on time? Thanks for your time.
ANSWER
I think the pps is low for a number of reasons. Originally, the market capitalization of Winning Brands was higher because it was based on the premise that the company had a great deal of potential. As it took longer for the company to implement the business plan, the prospect of the company’s “potential” as the basis of a higher market capitalization waned. This was compounded by the loss of credibility due to the apparent inability of the firm to gain a real foothold in the USA, a possible loss of the Walmart account in Canada, and the degree to which operating losses exceeded revenue, necessitating greater than desired dilution. The determined effort of a few discussion board posters for whom bashing is a hobby could be blamed for harming the atmosphere on the discussion boards, but in reality their criticisms would not be possible if the underlying conditions of the firm had been better, and “longs’ had more ammunition to respond with. The fact that the clearing environment for small cap companies has been increasingly difficult since 2009, leading to all sorts of practical problems for this cateogry of security today, is a negative practical reality too.
There is also a school of thought that I should have promoted the shares more aggressively. This is a complex issue. The most ethical basis on which to conduct a promotion, is the honestly held view that there is important information that new investors are not aware of – and if only they would know this information – then they would buy the shares to offset the arrival of new shares through financing. The problem with this theory, as it applies to Winning Brands, is that the nature of this information would, at present, still be based in the argument of the company’s potential as the premise of the promotion. I have concerns about the ethics of that, and even the effectiveness of that, in our case. These Investor Awareness/Promotion campaigns usually get out of hand with promises and predictions being made by third parties that would make any reasonable person cringe. Luring people to buy our shares with hype provides short term liquidity for very few people to take profits on the way up (if that happens) and causes grief the moment the promotion tap is turned off. At fees of $10,000 per day or more, a huge amount of money can be diverted away from the fundamentals of the company into a paper chase with questionable morality. However, there are conditions under which it is not only permissible, but necessary, to launch full scale investor awareness. If, for example, the current perception of a company does not correspond to the facts, and the immediate and widespread distribution of corrective information that highlights the reasons why current perceptions are factually wrong, that is a different matter. Accordingly, Winning Brands has conducted research into possible IA services. When Winning Brands hits its stride and its success will be indisputable, then it will be terrific, and necessary, to “spread the word” widely about the fact that the company needs to be looked at again. Until that time, it is irresponsible to characterize the firm in terms that are other than the stark facts: It is highly speculative, in the most risky cateogry of investments, and not yet proven in its ability to complete its mission. That is not the basis of an effective IA campaign.
Despite these issues, there are powerful countervailing factors which are positive, which are just as “real”, as the issues above. These include:
- Winning Brands is managed and operated by a group that cares about achieving its goal. This is not a “typical” company in its category, where the business plan is merely a premise to raise money, and can change every three years or so. This company consists of good, hardworking, resourceful people who are determined to do their best. So, culturally, Winning Brands is more committed than most. It also has a product(s) that are clearly interesting and competitively distinct.
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- While it is true that it has taken a long time to advance, there is nonetheless verifiable progress that is goal focused. So for example, while Lowe’s USA did not yet provide a national listing, it has operated a continuing test that remains positive in its findings. While Home Depot USA did not yet provide a national listing, they did place our lead product into their HomeDepot.com offerings, where it remains in the top third of performers within its cateogry. While the Duane Reade division of Walgreens required longer than anyone would have liked to activate our listing, it is now underway in twice the number of intended stores, in one of the most important cities of the world. While Walmart in Canada paused its ordering for a year, a new and fuller re-launch is underway. The return of ordering by this retailer speaks volumes. Walmart’s division, Sam’s Club, required time to evaluate us before granting permission to join their Events Showcase program (Road Show), but that is beginning in days. While it has taken time to work our way through the complex procedure of qualifying for the U.S. GSA (which would allow our products to be purchased by military and other federal procurement personnel) , we have advanced to the point of it being almost in hand. While not all countries in which we began our sales initiative have been as practical to advance in, some have been fruitful and are growing. While it took us several years to gain a listing by Do it Best, it has now happened in fact, and is being activated with positive cooperation by all parties. There are many other examples that illustrate that we are not quitters, and that our perseverance is showing itself to have been worthwhile, and that the momentum that we need is actually emerging.
- The market capitalization of the company is at an all time low of approximately $1.5 million, however the operational platform for the company is at an all time high, with more conversion of “potential” into “action” happening now more than ever. This represents an opportunity gap for investors and makes our shares very attractive currently, if one weighs the factors which are threats to the company’s survival vs the factors which icrease the likelihood of the company’s survival and prosperity. The unique opportunity for investors at this stage in the company’s development, in my opinion, is that it has more to gain than to lose, and that its market capitalization (ie the basis of pps) has more reason to increase rather than decrease. Yes, I am confident in our future. I know how hard we have worked to get to where we are in the emerging U.S. distribution and the enthusiasm and friendliness with which we are being received by our emerging U.S. retail partners. Our lead product is now getting their attention, at last, and 2012 has new practical grounds to be a very positive experience for us all.
- Our filings are due November 14th, and we will be on time, as usual.
