Small Business Development Group Inc (SBDG)

[MoneyWorksForMe]

SBDG Will Stick to the Plan

Roy Salisbury - Tuesday, January 28, 2014

After 2 successful quarters in 2013 (3rd & 4th), the management of Small Business Development Group, Inc. (SBDG) is looking forward to 2014 with excitement and anticipation as it continues the implementation and execution on its strategic plan. The Company has completed almost all of its restructuring, and has built a sustainable and defensible capital structure. Management has the strength, knowledge and commitment to execute the Company plan as described.

SBDG is growing revenue, assets and share price based on its business plan; however, the Company still has a ways to go to establish itself as a creditable investment opportunity for small and medium retail investors. It has proved challenging to educate investors so that they will understand that a Company such as SBDG can remain a Current Information Pink filer, yet focus on business and financial fundamentals with higher-minded governance, transparency and professional ethics.

The SBDG strategy, known as the Engineering of a Public Company(TM), is based upon the acquisition or creation of a publicly-traded small-cap company that operates as a holding company for the enterprises to be acquired. This holding company can be a Current-Information Pink Sheet, QX or QB company trading on OTC Markets. The model anticipates that the holding company will, itself, likely trade on a lower-level exchange than will some of its portfolio components once they go public. There are, in fact, significant advantages to using a Current Information Pink Sheet company for this purpose, specifically because this unorthodox configuration allows the holding company to acquire and invest in portfolio companies without the expense of costly audit and compliance fees, and that it is not required to file reports with the SEC. Regardless of the structure, the Company and its management are, of course, subject to all the anti-fraud regulations by which all public companies are governed.

The model anticipates the creation of liquidity events and monetized income return on a given investment. This is accomplished by developing core subsidiaries and portfolio groupings that can be turned into a standalone registered public companies listed on higher-level exchanges than is the Company itself. By employing this process as briefly described, shareholders in the Company can benefit from owning registered shares and from cash in the form of dividends generated through the successful operation of the Company.

It should also be noted that there is an advantage inherent to this model with respect to arbitrage. Private companies, in most cases, are valued based on an EBITDA (Earnings Before Interest, Taxes Depreciation, and Amortization) ; Public companies are usually valued on net Income after taxes, and alternatively, on enterprise value. Therefore, as a public holding company, the value of a private company acquisition has a greater value. Once owned by a public company, the arbitrage value can be modest to significant (10 to 100 percent) over its private valuation.

Finally, the model calls for an exit strategy in the form of an S-1 registration, anticipated to occur within three years of operation. The registration will encompass a core group of subsidiaries from its portfolio in which the Company will be a selling shareholder, retaining a strong equity stake in the new public company created by the S-1 registration. The company will then dividend out a portion of the registered shares and cash to its shareholders.

Summary
New Management’s plan started with a failed enterprise called Virogen, Inc. that had billions of shares outstanding, the vast majority of which were in the hands of promoters and shareholders who had no real cost basis. Management began by planning for the worst and hoping for the best, and received a little of both during the early stages of the restructuring.

Management had to make some hard decisions, one of which was a heavy reverse split in order to create a better capital structure, reaching out to those shareholders who held shares that should be returned to the treasury. To management’s surprise, significant numbers of shares were, in fact, returned to the treasury (post-split 132,880; pre-split 6,644,000,000). Combined with the reverse split and the recovery of the aforementioned shares, the Company has a very tightly held public float. Management further elected to restrict the newly-issued shares to controlling shareholders (RYS & Co.) with a 2-year legend which, it is hoped, will project confidence in our public shareholders that there is a long-term commitment to growing the Company.

All of this makes SBDG unique in its quest, but also puts it on the initial path of being misunderstood by the average shareholder/investor. SBDG will continue to implement its strategic plan while undertaking new efforts to promote its message and philosophy to counteract unproductive information that is very prevalent in the small and micro-cap market place.

http://sbdgp.com/blog/sbdg-will-stick-to-the-plan/