<font color=green> *MEMO FROM ERIC
Hello Mr. Geezy,
The answers to your questions appear below in blue for ease of use:
Sent: July 14, 2008 7:48 PM
To: Eric Lehner
Subject: Share Structure Update
Hello Mr. Lehner,
I continue to be a faithful WNBD shareholder and I could not be happier.
Thank you for your support.
The latest update for the website was March 15, but you emailed me on May 9th stating that the OS has slightly gone up. The website still states that the information is from March 15, 2008. Do you have the current share count for WNBD?
I am intending to post an adjustment in the next 24 hrs. The reason for the delay is that I wanted to ensure that all shares where reflected in the figure, including those that were intending to be issued to qualified investors as at the date of posting. The discussions were on-going.
Also, I don't know if this is information you can share with me, but I know that the company has had to raise some capital for expenses, when do you see the company being able to produce enough revenue to cover its own costs?
That is a fair question. Self-sufficiency is certainly the goal (although I marvel at the number of public companies that have years of huge sustained losses). There are two aspects to self-sufficiency; the first is operational self sufficiency in terms of day-to-day operating costs. The second is the self-sufficiency of initiative - meaning the ability to undertake new programs that are likely to cause growth but require investment beyond ordinary cashflow. If by the end of the year I am in a position to confirm movement of the firm from Phase I to Phase II of its stages of growth as described in the FAQ section, then self-sufficiency of the first type will have been attained. It is unlikely that we will be able to undertake major expansion without capital however because the type of programs that can bring about growth do not pay for themselves within the payment time frame required by suppliers. For example, if we secure a listing with a major U.S. retail banner, it might be possible to position 1,000 - 2,000 mobile metal display racks with custom graphics within the stores. Such racks (which would remain our property) would cost approximately $400,000. They would have a powerful effect upon visibility of the company and its product, with attendant benefits - but the benefits would take longer to flow through the pipeline than the 30 day time frame in which the racks have to be paid for. Full recovery of the investment might take a year. This would be a responsible use of additional capital for example.
With that said, I know you and your team have been working on closing national account(s). Is there any time frame when one, or some of these will be closed? Back in February, it stated in one of the press releases that you would be adding a national chain in March, or somewhere close to that. Is there a reason for the delay(s)? I understand that some companies have to hash out deals with you first before you can PR the deal. As you told me before, you visited the HQ of Home Depot USA in Atlanta, how is that deal going? Have you been in contact with any other US "big box" companies? Costco, Wal-Mart, Lowes, etc. ? Again, I am not sure if this information could be shared with the common shareholder, but I would appreciated any new information you could share with me.
There are several factors affecting the timing of progress in such listings. The first is the seasonal nature of the Planogram sets. Buyers for the largest chains organize their reviews according to the calendar. If there is any reason why a negotiation cannot be finalized within a particular "window", then it might be necessary to hold over the discussion to the next "window". The second factor is that buyers want to know how a prospective product compares with competitors. It is our policy to not "knock" the competitors because we cannot ethically speak about their capabilities due to a conflict of interest inherent in such comparisons. Therefore, we prefer to rely on in-person meetings with buyers wherein we can demonstrate the capabilities of our products on their own merits, and let the buyers compare this with what they have seen from others or been told by others about their own products. This process takes longer because it involves in-person meetings that provide hands-on experience. Thirdly, buyers are professional negotiators. They strive to obtain every concession possible for their organization. A young company like ours is easily tempted to accept any deal with a major prestigious chain in order to report such progress to shareholders, but it would be a hollow exercise if sufficient margins are not left on the table that make that business relationship mutually beneficial. Therefore, the major store buyers are still getting to know us and assessing the extent to which Winning Brands will hold to this principle. For this reason, we continue to develop relationships with the many independent stores across America whose operating style and buying style, is different because of different circumstances and needs. The independent stores are more concerned about low minimum order quantities, attractive payment terms and in-store merchandising tools. Accordingly, we have equipped ourselves with 3rd party Accounts Receivable financing capability, counter displays and regional distributors who can ship smaller quantities.
It is one of the hardest things in the world for me to continually bring discussions with investors down to earth. CEO's are judged by the share price, and company performance. There is a tendency by CEO's to try to make things look better than they are so that they themselves will look better. I would rather be known for realism and suffer the criticism that things are taking longer than people would like. In this way, when the finishing line is reached (ie goals realized) they will be real. Also, this is the most difficult stage of the company's growth. It is like trying to take a new aircraft down the runway toward lift-off. There is an awkward stage just before lift-off when it just doesn't feel comfortable for anyone. But once we are airborne a whole new set of conditions exist. If we secure a national U.S. retailer - one that would enable to direct consumers to our product(s) close to their homes regardless of where in the country they live, then this would be equivalent to lifting off and being airborne.
I thank you and the shareholders in general for understanding and trusting that I am a sober, committed, focused and resourceful pilot taking this aircraft to the point of lift-off so that the Winning Brands insignia can be seen in the skies across America. I have the honour of working with colleagues who are also eager to achieve this goal and are contributing their expertise with increasing sophistication as they become more familiar with the many issues involved in sales, finance and production. Accordingly, things look good in the cockpit of the aircraft and we are all confident about the flight ahead. The investors are our passengers, and we anticipate being able to provide them with a good view from above.
Eric Lehner, CEO
Winning Brands Group