Winning Brands recently announced completion of its GestureTek acquisition. That news release link is below. In the news release, a preview of the path forward in financing was given. Further context is provided below. The following explanation will help Winning Brands shareholders and creditors see how GestureTek will assist WNBD stakeholders to build a valuable Winning Brands parent company, and how Winning Brands (the parent company) in turn is setting the stage for future GestureTek subsidiary customers and investors to thrive.
NEWS RELEASE LINK:
https://www.accesswire.com/723219/Winning-Brands-Acquisition-of-the-GestureTek-Brand-is-Complete
Pertinent Section: “As a result of this transaction, all previous GestureTek intellectual property and asset ownership held by others in these proceedings is now vested with Winning Brands instead. Winning Brands will be creating a new GestureTek corporate entity for all future commercialization of GestureTek and will utilize a minority portion of that new entity for the purpose of future GestureTek financing, rather than relying on Winning Brands common stock dilution. Therefore, future Winning Brands stock issuances can be utilized to accelerate the retirement of debt faster than would otherwise have been possible. The new GestureTek subsidiary will have a valuation that is significantly higher than Winning Brands’ present market cap. This arises from many factors, including specific existing GestureTek patent rights and goodwill factors that follow from years of tech industry leadership. This will make it possible to raise significant GestureTek growth capital with only modest equity encroachment into the subsidiary, rather than utilizing WNBD common shares for that purpose. The new GestureTek equity investor positions will not enter the OTC market system for the foreseeable future. This approach will benefit current and future WNBD shareholders greatly.”
CONTEXT AND SIGNIFICANCE
GestureTek corporate valuation characteristics can best be understood by not combining them with Winning Brands valuation characteristics. This is because GestureTek’s history, value metrics, customer base, intellectual property elements, industry dynamic and future growth drivers are distinct from the factors that apply to Winning Brands.
A unique valuation basis exists for GestureTek. This is especially so because GestureTek was paid for the purchase of some of its assets in 2011 in an arms-length divestiture transaction, by one of the world’s foremost technology companies. That transaction can be evaluated today and adjusted appropriately in order to be made relevant for today. This is done by taking various factors into account and applying a Present Value to the remaining (substantial) GestureTek portfolio. A link to the news release describing that earlier transaction is provided below.
NEWS RELEASE LINK: https://www.qualcomm.com/news/releases/2011/07/qualcomm-acquires-gesture-recognition-assets-gesturetek
The benefit to Winning Brands shareholders of that 2011 valuation event is that today’s new GestureTek subsidiary, being created now, can be valued for financing purposes with an independent historical reference basis, rather than a subjective and speculative reference basis that has no precedent. The exceptionally high quality of the transaction partner who issued the news release shown above adds credence to the professionalism of the valuation factors that were applied at the time. This is enormously helpful.
A new GestureTek subsidiary can now be created because the court approval for Winning Brands’ acquisition became formal and final in October 2022 with the issuance of the Receiver’s Certificate. The new GestureTek subsidiary will, on the basis of an inevitably substantial valuation, be accepting a large dollar value minority investor infusion in order to stimulate GestureTek’s revitalization and growth. A portion of this infusion will flow through to Winning Brands as advance royalty payments under licensing from Winning Brands, as well as reimbursement to Winning Brands of certain early costs incurred, and will ultimately include profit sharing pari passu with other GestureTek stakeholders. This flow through will benefit Winning Brands creditors and shareholders, both.
The capital infusion to be made by the new GestureTek minority investor group will be received by means of a new Regulation A+ Tier II offering that is specific to the GestureTek subsidiary. Liquidity for GestureTek Regulation A+ subscribers, who will be members of the public solicited by means of a professional online offering sales platform, and social media advertising, will not occur through the OTC Markets setting for the foreseeable future. This is a key benefit and accomplishment for Winning Brands shareholders.
This means that GestureTek will be permitted to raise millions of dollars of operating capital (not debt) without encroaching on the majority holding interests of Winning Brands, and without causing dilution of Winning Brands common stock for GestureTek’s future growth needs.
The potential dollar value of GestureTek operating funds to be raised in this manner is significant, yet will not interfere with trading of Winning Brands common stock. The GestureTek stock will not appear in OTC marketplace following issuance. Understanding this point is at the heart of understanding the acumen of this approach for Winning Brands stakeholder interests.
There are several reasons that a new GestureTek subsidiary is being created, rather than utilizing GestureTek Health (which is an existing related entity) to be Winning Brands’ commercialization vehicle going forward. The first is that the new subsidiary will not hold GestureTek Health legacy debt. GTH minority stakeholders and/or creditors will for the most part be accommodated through negotiated equity arrangements in the new subsidiary instead. Also, the new subsidiary will be audited. There are other technical and legal advantages of the commercialization subsidiary being new.
The new, dedicated, GestureTek Regulation A+ will be coordinated by top experts in the field who have an impressive track record of multi-million online offerings to the public. Further details will be revealed as arrangements advance, as soon as possible.
The existing Winning Brands Regulation A+, which as already been approved by the SEC, will enable Winning Brands to reduce its debt. Winning Brands is committed to addressing and satisfying its creditor arrangements, including investment lenders and commercial lenders. The cooperation of such creditors is immensely appreciated and is a contribution to the aforementioned plans that are so beneficial to WNBD shareholder interests.
There is no obligation by Winning Brands to issue the maximum number of shares allowed under the existing Regulation A+. Furthermore, the pricing of the Regulation A+ offering may be amended through a revised SEC filing. Therefore, a stronger WNBD share price will be possible as the reality of GestureTek’s implementation takes hold and is understood. Cooperation between WNBD stakeholders in all financing matters will yield optimal results. WNBD management is grateful for such cooperation.
SUMMARY
Prior to the acquisition of GestureTek, WNBD relied on its legacy operation in the field of environmental consumer products to drive value. Despite its excellent products in that category, WNBD management pursued a method to dramatically increase the slope of its possible growth in value by embracing entirely new value drivers.
Winning Brands’ VISION 21 set out a bold plan of creating a tech division as the central feature of that strategy. Now, Winning Brands has delivered the key declared objective; a court verified and approved acquisition of a fine, respected and relevant tech portfolio.
This was accomplished by in effect rescuing GestureTek assets, rights and legacy elements from receivership circumstances that were commercially unnecessary. The circumstances did not accurately reflect the business value potential of the GestureTek brand when operating with adequate funding. The consequence is an exciting new phase of potential growth for WNBD.
Winning Brands is respecting its pledge to retire outstanding Winning Brands creditor interests by this plan, while at the same time demonstrating that dilution of Winning Brands common stock has a new premise. Rather than being a method to obtain working capital it will become a method to improve the balance sheet, instead.
In addition to these benefits for Winning Brands shareholders, GestureTek customers, staff and future investors will benefit too. The substantial new cash resources that the GestureTek Regulation A+ will bring by means of its new Tier II offering, will foster renewed excellence in GestureTek operations and reputation.
More information will be supplied as soon as possible regarding the foregoing, and more shareholder questions will be answered.
