Winning Brands Corporation (WNBD)

[bradakus]

Not to worry Eric knows what he's doing..........This reality check is highly relevant to the subject of dilution. Poorly informed persons make the misleading argument that achieving an attractive capital gain is determined by the size of the float, or outstanding shares available for trading. In their simplistic model, the lower the O/S, the better. They argue that the opportunity for capital gains is higher in this case. Actually, that is not the case. Capital gain is the difference between the purchase price of a stock and its higher sale price. With a low O/S, the market capitalization of a company is divided by a smaller number of shares, and therefore the purchase price is higher too. This means that a much greater absolute increase is required for any given percentage increase.

So, for example, if Winning Brands had only 1 Million shares outstanding, then everyone purchasing a share would have to pay much more per share. Under current circumstances, it would cost approximately $4.50 to purchase a single share. To experience a 100% capital gain, the share price would have to grow by another $4.50 to $9.00.

If on the other hand, an investor who purchases a share of Winning Brands at $0.0025 is to experience that same 100% capital gain, the share price needs only to go to $0.0050, ie. a quarter of a cent increase. The investor’s $1,000 investment has gone to $2,000 in either case, for a $1,000 capital gain. The capital gain is not determined by the O/S. The most important factor determining the prospect of a capital gain is the likelihood in the change of the perceived market value of the corporation in dollar terms, ie. the market capitalization, or “market cap”. The key factor determining growth of market cap is a determination of whether the market cap is currently under-priced relative to its likely value if the company achieves its goals. Dilution is a problem if the capital raised is not used to increase the likelihood of a higher market cap. Responsible dilution is neutral in its effect. Winning Brands dilution has resulted in a better brand, more experienced, talented staff, better retail contacts, new trademarks, R&D , higher consumer awareness through advertising and the begining of the reduction of debt.



http://winningbrandscorporation.com/blog/2011/02/19/putting-capital-gain-market-cap-and-dilution-into-perspective/