Conversation with IR Firm (John) – Summary
(along with my own general comments about the state of things)
All - I had a very nice discussion with John at the IR firm today. First and foremost, I'll say that John is very impressive. His previous background as a market-maker (in his previous life) is a HUGE plus for us in my opinion. He understands both sides of "the game" and I FEEL that benefits us as shareholders to know that his recommendations to Mgmt will be in the best interest of the shareholders and the impacts to the PPS considering John understands the impacts and strategies that MM’s take and the overall desires of shareholders.
As I mentioned during my communication with Lee Miller, the Mgmt team is fully aware of the need for some awareness and PR updates for shareholders. The Mgmt approach up to this point has been to approach the investing community in the same manner as a "big board stock" by letting the financials speak or themselves, be 100% fully SEC reporting, and the pps will hence display the correct market value based on fundamentals. Thru communications with shareholders and John at IR, the Mgmt team, is "learning" that penny stocks do not "act" the same way as big board stocks. Mgmt is understanding now that more communication is needed and additional PR communications and/or some sort of stock/investor awareness is needed in order to attract new money into the stock.
This being said, I want to be clear, there is still NO confirmation of a PR yet, or any stock awareness that is underway. BUT, that doesn't mean there will not be one. In my personal opinion, after speaking with John & Lee, the Mgmt team will be taking some sort of action very soon.
We ALL know that we need new investors to be made aware of the significant undervalue here and the apparent potential of this company to succeed in its growth targets. This would involve some sort of stock/company awareness strategy to attract the new investors and soak up more of the float.
I also shared some discussion with John about stock awareness programs and how sometimes in the penny world, the opposite affect can happen simply due to the perception of a pump and dump. John is fully aware of this impact by following stocks and his own contacts with promotional companies is vast and impressive. Any recommendations he will be giving to mgmt will be well thought out and only reputable, responsible promotional companies would be considered, if they even go down that road at all.
As for the debentures, we all should know that as normal part of business Cash is King, especially during tough economic times. You MUST have cash flow to sustain operations. These economic times have made it difficult to receive direct financing, we all know that banks to be more “stingy” with financing during these hard economic times. A more dependable (liquid) and responsible way for public companies to gain financing are thru convertible debentures. I know that the conversions will strain the pps as more dilution happens. Mgmt is fully aware as well (Lee Miller is the largest single investor here), hence the need for attracting new investors along the process. The rules and pricing for convertible debentures and how they convert the shares are more responsible than just handing out shares for cash as a lot of other penny companies do. Also, the cash interest expense is MUCH lower. Once sales pick up from the Marketing campaign, the cash flow will improve and less shares will be introduced in the marketplace.
Here’s my take on a perfect chain reaction,
- PR updates for existing shareholders and money on the sidelines.
- A Small, responsible stock/company awareness strategy. Absolutely NO chance for a pump and dump.
- New money flow comes into the stock as a result.
- PPS increases to offset the new shares that are converted until Revenues improve.
- Revenues improve to the point where no more conversions are needed for cash financing.
- When company is again, Self Financing, the PPS will then skyrocket as the ask will be even thinner than it is today.
Self Financing = less bidwhacking = More Ask Slapping = HIGH PPS!!!
As for the disconnect between the share structure on IR site and the T/A figures, I am expecting a clarification soon from John. He knows there’s a disconnect and is eager to figure out why and have it explained and corrected.
I will update on any further information I receive along the way.
River~
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