Hello Moderator Team – Quick answers to some recent questions
Why fewer Form D filings: We have had fewer 504 subscriptions recently – that is one reason. The second is that we stay in touch with the SEC in order to ensure that we understand procedures and policies properly, and thus apply them appropriately. In the most recent discussions with the Office of Small Business Policy, it emerged that the SEC would consider it a preferable alternative to file fewer amendments (because there is no material change to the subscription conditions in the amendments) and instead file one amendment which states the balance of the unused annual portion of the 504 as one event, even if the entire subscription is then actually filled over the course of the remaining year. Accordingly, we will in due course file an additional Form D amendment for the entire available balance, but still adhere to the policy of not exceeding more than $1 million per year by distributing that activity responsibly over the course of a year. We will make our O/S change updates part of our filings and update the website accordingly – so our shareholders will continue to have confidence in our market activities.
Status of the Attorney Letter for Pink Sheets: Counsel had asked for documentary evidence that the Preferred Shares convert to Common Shares at the rate of only 1:1. This low conversion rate is unusually favourable to common shareholders amongst our peer junior public companies. Suitable original documentation arising from the Agreement of Merger dated January 1, 2006 has now been supplied to counsel. This was an important due diligence point because the 1:1 conversion means that there is no party currently known to hold more than 5% of common shares, even if all conversion rights are exercised. Such questions and due diligence research has been the reason that the Attorney Letter had not yet been submitted. Our premises, the retailer settings and our CFO have also been vetted in personal examination by counsel.
Store Count: No stores have been removed from the Store Locator system by us. If there appears to be a decline, please let us know. We have not removed any.
Lancaster updates: Following the acquisition of 5 Star by Lancaster, there have been significant procedural changes there that they are still working out; closure of a warehouse to be replaced by a new one, substantial personnel changes, adjusted reporting lines, shifting priorities and consolidation of policies. This has meant that the tidy process that we had been enjoying previously, ie receiving the store updates like clockwork, has been interrupted and is still affected. I should emphasize that Winning Brands takes an uncommon interest in knowing where its product is available so that we can make this information known to retail consumers. Generally speaking, distributors regard such information as proprietary. Distributors do not like to provide lists of retailers to whom they sell a manufacturer’s product. Also, it represents a time consuming process for the distributor to compile, with no immediate apparent ROI to the distributors. Therefore, we are grateful to Lancaster for making an exception in our case. They understand our reasons and will continue to cooperate, but to put it in plain terms, they have a lot going on at the moment. Winning Brands is respecting this fact of life by not being a nuisance about these updates, while still persevering to obtain them asap. It requires balance, like so many things. This behind-the-scenes situation there will affect information flow to us about the March 2010 shipments as well. You may rest assured that we are not overlooking the desirability of the release of this data.
Timing of the DRTV: Our original News Release was clear in saying that the preliminary plans were for the launch of the DRTV by the first week of May 2010. The word preliminary is well understood to mean facts that are known “prior to, or preparing for, the main matter” – in other words an estimation pending final details being known and confirmed. Now that the DRTV planning process is highly advanced, I am pleased to confirm that we are still targeting May – possibly the Memorial Day weekend, for the commencement of our initial on-air testing on national cable channel(s). There are several factors at work in the equation, including our introduction of a very interesting new packaging concept for the on-air offering, which required sign-offs by a number of affected parties (artwork, production planning, materials sourcing, etc). Despite this fact, the launch date still appears to be within a few weeks of the preliminary date targeted back in December 2009, and thus well within the zone and has absolutely no impact on its outcome.
NA Account Status: The most recent written undertaking by that first partner, this week, is that they will expedite matters to the best of their ability, because they understand that we have been waiting a long time and the fact that we have invested in EDI compliance and protocols (Electronic Data Interchange), as well as having the commitment to carry EDI direct costs. How quickly does “expedite” mean? I cannot answer this for another party, but I appreciate the continued goodwill that clearly exists in that relationship, for which I am grateful.
Quarterly Reporting?: Yes, we will be within standards for quarterly reporting, meaning 6 weeks from the end of each quarter. The annual report takes longer.
Summary:
Everything is moving forward and going substantially according to plan. What is that plan? – to ensure that millions of American consumers coast-to-coast discover America’s most versatile cleaning product, Winning Colours Stain Remover, and purchase it on a regular basis through retailers that are convenient to them, on-line, on TV, and in every manner required to make Winning Colours recognized as the cleaning sensation that it really is.
By staying focused, keeping costs in line and reinvesting in things that build brand value, your management team is showing dedication to the interests of the common shareholders of Winning Brands. We are confident that 2010 will end on a much improved note over 2009 and will vindicate the positive instincts shown by our early investors who recognized a winner when they saw one – before others could.
Eric Lehner
CEO
Winning Brands Corporation
P + 1 (705) 737-4062 ext 101
F + 1 (705) 737-9793
W www.WinningBrands.ca
