Hello all. Last year I said that we would be looking at a number of things for 2013 that would benefit BeBevCo and its shareholders. I have had many conversations with a lot of different people on the Corporate front as well as the Public side of this business. Some of the items we have addressed are:
- Organic growth vs. growth through financing
- Increasing the value of the stock by buying back some of the stock in the marketplace
- Getting financial audits done and preparing the Company for the day that we move to a senior exchange
- European and Asian Expansion of BeBevCo
With regard to each item, I will take you through what we have decided is the best course for the Company. Our plan of action will benefit our shareholders in the long term. I value your feedback and nothing is set in stone yet, but here is what our thinking and reasoning is now:
Organic vs. Financed Growth and Stock Buyback
BeBevCo growth has gone beyond my greatest expectations since our move into Walmart. We have added many more Walmarts including south Florida, and the Dallas/Ft. Worth area in Texas and New York. The cost of this growth has required substantial investment. We are having to spend more and more money on production, promotion and all of the other costs involved with having to produce and place a lot more drinks and shots.
Last year, I said we would consider doing a buyback of our stock to clean up our capital structure and to benefit shareholders. However, at this time, does it really make sense for us to do that? Let me explain…
There are two ways we can go with this strategy; one makes sense to me, the other makes less sense at this time. It basically boils down to this:
- Use our own funds through revenues to continue to grow this Company at a rapid pace or,
- Buy back the stock in the marketplace immediately and borrow the money for growth
At this time, if we put a stop on growth and buy back the stock, the stock price will be higher but we will have to do an equity-based financing to get the money to continue our growth. If at all possible, I think most would agree that avoiding dilution is the way to go. What do you think we should do?
However, this does not mean that we will not buy back stock; we are going to buy back stock but we are going to do so with a discretionary buyback. Throughout this year, rather than have an organized and well publicized buyback, we will buy back the stock periodically. It is in our best interest and in our shareholder’s best interest to buy back the stock over time to reduce the number of shares available in the marketplace. This feeds into our strategy which is outlined in the section below, Audit/Senior Exchange.
Finally, I understand completely the patience it requires on the part of the shareholders. But I also deal with both the growing pains every day, new job hiring, as well as the needs of the Company. Fortunately I have a front seat for the many projects coming at us from major partnerships, both wholesale and retail that are not yet public. So, basically I have information that you do not have yet. Because of the nature and speed of growth everything, we review and discuss weekly, and everything is always subject to be modified. I believe our business model is fluid and not rigid.
We feel that to best prepare BeBevCo going forward is to begin the process of getting our financials audited. We are planning to begin that process later this year. We want to move BeBevCo to a senior exchange at some point in the future and our growth as a Company will certainly justify the move. It would be much easier to facilitate a move to a higher exchange with our revenues ramping up and at a multiple of our current revenue growth rate.
At the same time, I do not believe that getting to fully reporting status and moving to the OTCQB or OTCBB is in our immediate best interest due to the cost and the time involved in getting all of this done. What I am saying is to get our financials audited and continue to get audits of each quarter done going forward. This will be a big step and will have us prepared for the move to the senior exchange.
I believe the best strategy for us is to earn a higher value for BeBevCo to get to the higher stock price required to be listed on a senior exchange such as the NASDAQ, AMEX or NYSE. However, this may not be the best or most practical route. An alternative may be to purchase a senior exchange vehicle or go through the Form 10 process and merge BeBevCo into a new vehicle or via a registration. This would benefit the Company by having a much cleaner capital structure and benefit shareholders of BBDA by having a higher- priced stock.
Again, not set in stone, but this is the solution we are leaning toward at this time.
European and Asian Expansion
As I said in my previous update, we had a short delay on our formal announcement of our Euro/Asian expansion. All is back on track now and we expect to start making these announcements as early as this week. Stay tuned.