Off Yahoo, for what it is worth. It is a quite credible response from Roy and - heartwarming! Fox.
QUESTION:
To: info@bravobrands.com
Subject: Tuesday's Conference Call
Good morning to you!
Congratulations on the decision to publish the announcement on Tuesday's conference call this morning ( Friday ).
I offer the following only because what should have been a raucous event has inexplicitly become the darkest days in the companies price per share history, an anomaly I can only explain at this point with a poor understanding of investor's fears fueled by a deeply discounted stock option issuance without guidance by a company that previously has proven to be one of the BEST with guidance and information flow.
Let me start by quickly letting you know I have just over 20 years in corporate America in various financial, management and executive positions ( as high as controller ) for a couple different Fortune 150 companies ( including your "neighbor" Republic Industries ). I hold only about 30,000 shares of BRVO at this point in time ( half bought at what seemed like the "rock solid" level of $1.00 per share. As you are aware I am sure Bravo is probably one of the largest dichotomies available in the stock market in that it is one of the fastest growing ( sales wise ) and fastest declining ( price per share wise ). Clearly the market price is being driven by fear despite your best efforts in the earnings conference call. Although the call was filled with tremendous guidance, the lack of substance and outside support has been overridden by fear that the stock is worth only what Coke has paid for it ( 36 cents ). The lack of "support" I refer to is the Lehman report that was mentioned in regards to potential capacity to support sales next year of $80 million. I have met no one that can find any mention of that report.
It is imperative in my opinion that a portion of the conference call give some detailed support over what Bravo got in return for the .36 share options to CCE. A "fuzzy" explanation is going to drive this stock right to the .36 level now and maybe below on the next earnings report, which, although prior guidance said to expect a loss, will provide more fear to an already horrendous situation. The disjointed announcements previously released in which CCE was going to become majority stockholder AND hold the companies largest contract ( a tremendous conflict of interest at best ) starting this string of damage and little has been done specifically to mitigate it. This is starting to look to many it is primed for a reverse split after the damage the CCE publicity fiasco has done and that of course will only serve to drive the market cap down even further.
I have talked to a number of people in person and through the internet who have tried and really liked your products. I think you have done a wonderful job, until CCE, managing public relations and information releases and created great excitement for these products. I think CCE's distribution capabilities will indeed drive this to the level that the product quality and desirability afford. However, if you don't explain HOW this works to the market with some specificity regarding the .36 options to CCE ( i.e. why 36 cents when the market was over $1.00, what exactly are we getting for that discount ) we are destined to drop to the 36 cent per share price or below VERY quickly.
Thank you for your time and consideration in advance.
ANSWER: FROM ROY WARREN
The warrants were issued to CCE as a function of a renegotiation from their demand that we sell them 50% of our shares for $38mm. While we wanted to get the MDA there was no way we could accommodate them due to our share count and authorized shares. They found 9 shareholders that agreed to sell them 69mm shares at $.36 if we would sell the balance of our authorized shares at $.16 cents which gave them 150mm shares of our total potential 300mm shares outstanding at the end of the day.
When CCE backed away from their requirement to buy this stake in return for the MDA we renegotiated the equity interest to a 10% stake in the form of warrants at $.36 cents. Certainly Bravo received enough value from this vast distribution system to justify that potential stake.
I can find no logic to validate your view that the our shares should trade down to the strike price, it just doesn't make sense. The shares will trade based upon sales and earnings progress and some multiple based upon the market appetite at any given time.
My view of the share drop is more basic. When CCE renegotiated and released the sellers from their 36 cent commitment, they freed them up from the obligation to sell shares trading over $.90 cents for $.36 cents. That became "found" money and as professional hedge fund managers they began to sell immediately and I believe have sold virtually all of the shares they had committed to sell. The largest shareholder of the group is a long term shareholder and is not selling, but over 22mm shares became actively for sale. More sellers than buyers thus the price declined.
I will be as clear about our deal and future as possible during the call but I simply don't view your concern about the incentive warrants to CCE as being relevant to the share trading price, now or ever, unless they decide to exercise and sell one day. That possibility is not only unlikely but not possible for over 6 months.
Thanks for your thoughtful note. While I don't buy your point of view, I certainly appreciate your interest in our company and am pleased by your support and interest as a shareholder. You can fully expect Bravo management and board members to do what we can to maximize value in our company to benefit you and all our shareholders.
Thanks again for the note. RGW |
