Winning Brands Corp (WNBDD)

[Belgianshareholder]

Memo to iHub WNBD Board Moderators:

A shareholder sent me an e-mail, forwarding an iHub post, requesting that I respond. Because this is an iHub post, it is more appropriate to reply in iHub.

“I came across a letter on the WNBD ihub board, apparently addressed to you voicing the concerns of a lot of investors. It might be valuable if you could take some time to read this letter and provide your feed-back…http://investorshub.advfn.com/boards/read_msg.aspx?message_id=70878806…”

In Response:

Thank you for your thoughtful enquiry.

To state that the share price has plummeted in the past several months is a partial picture. The close on Friday was .0005, however the share price for several days in December 2007 was also .0005. On December 17th of that year, over 197 million shares traded, closing at .0005. Since that day in 2007, WNBD has risen from .0005 to over 3 cents and back again. Through that time span, there have been rallies. A critic who says that a rally cannot happen again for technical reasons is just selecting facts that are convenient to make their point. In reality, market cap is the most important metric, the “valuation”. The current market cap of approximately $1.5 million is lower than during that earlier period. This means that despite dilution, based on market cap, the company can return easily to higher levels if the market’s view that a higher valuation is justified, returns. The DTC partial chill does not affect all trading accounts, and is not necessarily permanent. Furthermore, the company has advanced in Pink Sheets from being a Stop sign, to a Yield sign, to a Current Information sign. More advancement in these tiers is possible. Also, WNBD has increasing likelihood to become self-sustaining and thriving with the recent progress in its listings. So, on the point of the share price – it has been .0005 before and can increase again. There are positive circumstances to consider, not only negatives. The relatively few iHub “critics” (and we all know who they are) only present the negatives and are obvious in their posting agenda. By contrast, the company’s communications are balanced by the company’s own frequent reminders of the risks, not only opportunities. The “negatives-only” posters (who admit that they are not even shareholders) discredit themselves by pretending that there are only negatives to see.

Dilution is not “running rampant” in the sense of being out of control. Our dilution reflects the need to raise capital, yes, but is related to sensible business operations. The firm is accomplishing more, despite lower expenditures, year over year. It is not known what the future share price will be, however, even small improvements in share price contribute to significant reduction in dilution. It is not possible to state the date and manner in which dilution will cease, however the emergence of higher 2012 sales could help enormously, not only alternative financing. Significant sales growth for the 2012 year is possible because of the recent growth in the number of stores that have gained convenient access to our lead product, particularly, the 4,000 store Do it Best hardware buying cooperative. It is not known how many stores will participate, how much they will buy, and how soon. However, the account clearly has potential on a scale that is new to Winning Brands. This one account alone has the scale of operations capable of making the company self-sufficient if our lead product became well-known and appreciated by the group’s members and its retail customers.

On the subject of the two “evils” that you refer to, increasing the A/S or a Reverse Split (R/S), we have to be careful in considering a basic assumption, that they are somehow equivalent. They are not equivalent – not even close. An increase in A/S, particularly if it is modest, does not “transform” the capital structure. It does not alter anything fundamentally and can be undone in the future. By contrast, an R/S is a “restructuring”. It is the replacement of all existing stock with a smaller number of new shares. An R/S is far more significant. R/S events are most negative if they are not associated with positive developments such as up-listing, but instead used as a lazy way to increase the share price. I don’t “like” the thought of increasing the A/S and would prefer to avoid it, but it is not equivalent to an R/S.

You are right in stating that I do not want to sacrifice the initial shareholders. We just have to also remember that with thousands of shareholders, the shareholder “group” is continuously changing in its composition, literally every trading day. Therefore, all the current shareholder interests are important. It is not necessary, appropriate or even possible to distinguish between these shareholders. All current shareholders have an interest to protect. The best protection is for the company to work effectively and hard to put the foundation of a desirable business in place.

You ask about the “source of optimism”. Despite the challenges, there are many practical advancements. These are detailed in our shareholder communications and update filings, together with the challenges. So there is a business case for looking forward to the future. On a personal level too, it takes a certain type of person to build a company. You have to be able to picture something that doesn’t exist yet, and then create it. In this case, we are talking about a consumer packaged goods public company with one or more brands that can become a household name and eventually benefit the owners of that brand(s) greatly. To take on that huge task requires the ability to see what is possible. Along the way, there are people who predict your failure. Typically, the failure predictors are people who have not personally accomplished such a mission. They look at every problem and emphasize how that is going to lead to failure. They are stuck in the “failure rut” of thinking. There’s nothing new or special about critics and pessimists. It takes no skill because it’s so easy. But an interesting common trait amongst people who have actually succeeded in a mission similar to ours is that they are problem solvers and have the tenacity and ability to see their way through the inevitable challenges. So the source of my “optimism”, if you call it that, has both a practical business basis and a personal basis - I know how much we have already overcome, I know how we continue to get better as a team, I know that tens of thousands of consumers now love our products, with millions more who would be glad to use our products when they discover them. We have more going for us now than ever. As irritating as it is to the doomsayers, Winning Brands has many of the leading indicators of a success story. The fact that we have not achieved that success yet is no more significant than a team that has not won the game “yet”.

We have always made it painfully clear to prospective shareholders that if they want a “sure thing”, this is not the place to be. If they want the excitement of seeing a dedicated brand team try to achieve something great against the odds in order to share in the benefits if that happens, then they’ve come to the right place. In my opinion, you will see evidence of our improving circumstances in 2012.


Respectfully,

Eric Lehner, CEO

WINNING BRANDS CORPORATION