We have started to gradually introduce our Loyalty Share Program. Today we will focus on the risks of this program for users.
We are not hiding anything and we will not and cannot
From the beginning, you’ve got used to the fact that we don’t hide anything. We keep you informed about everything that is happening. In the event of the launch of the share programme, we will have to continue this strategy and deepen it in relation to our shareholders. We anticipate pressure to provide more information to shareholders, but we are not afraid of it.
From the point of view of the law, we will have a certain information obligation towards our shareholders, which we will of course fulfil.
Our approach has been fair from the very beginning of our existence, which is why we have also treated the risks in detail.
Is it risky?
Yes, of course there are risks. It’s an investment and every investment comes with risk. From the outset, we point out that the whole programme is risky and it is up to everyone to assess whether or not the potential risk is worth it.
You could lose your investment
Yes, it can happen. If we run the company badly or something unforeseen happens, you may lose your investment.
Individual risks
You will lose all or part of your deposit
Anything can happen. Poor performance can cause you to lose your entire stake (your investment in the shares) or reduce the value.
The value of shares changes over time
The value of the shares may change over time. It can decline, it can grow. None of us can predict anything. Our aim is, of course, to grow the value of the company as a whole and thus the price of individual shares. The change in price over time can depend on many circumstances, but most of all on how the following things work out for us:
- growth (both in size and in terms of new market areas)
- innovations (new services, innovations to existing services)
- profit generation (this will be an important benchmark in the future)
- brand awareness
- client satisfaction and thus the good name of the company
Dividend will be no or low
We are not promising a dividend, or certainly not right away. Therefore, it is not a major issue at this point in time, but if we are to name risks, we must not forget that the dividend amount may change in the future. On the one hand, it can be high, but it can also be low or zero. It all depends on how we do.
Our program is combined with a loyalty program so that you get a 20% discount on the purchase price of your shares to extend your services, thus you already have a guaranteed return of 20% per year.
The dividend is decided by the shareholders
It should be noted that the shareholders decide on the payment of dividends. The shareholders at the general meeting decide whether or not it is paid out or in what amount. How to decide cannot be predicted. Of course, it is in the interest of shareholders to pay a dividend, but the decision cannot be predicted now. Even if the company makes a profit in the future, this profit may be used to further develop the company and it may be that no dividend is paid.
Displacement of shareholders
If the minority of small shareholders is a minority, they may (in accordance with the law) be forced out, which is a compulsory sale of shares. Of course, we are not planning anything like that, because it would go against the whole point of our programme. We’d probably have to fall on our heads to want to do something like that… In addition, we offer more than 10% of the shares at the very first moment and thus crowding out is no longer possible (according to the law).
Change in the market situation
The market environment is unpredictable. No one knows what will happen. The influences are endless. Of course, we monitor the market and are ready to react, but you never know.
Shareholder liability
A shareholder has no criminal or civil liability for the company. The shareholder is (in simplified terms) liable (responsible) for his contribution (the price at which he bought the shares). Nothing more and nothing less. The shareholder is therefore not liable for the company’s obligations.
Minimising shareholder risk
Here is about the only option we can recommend. Invest as little as possible.
It is also our wish. We wish to have as many small shareholders (in hundreds of crowns) as possible among our customers who trust us. This will not only give us shareholders as investors (which is not the main point of the program), but also walking advertisers who will care about our results as much as we do. You don’t believe it works? Already in the first two days since the introduction of the program, we have had several customers contact us seeking advice and help. They argue precisely that they are interested in becoming minority shareholders and so they care about our success. They suggest changes to the menu, they suggest modifications to the website, they suggest new services. It must be admitted thatall contributions had a head and a tail and we appreciate them immensely. This is exactly how we envisioned it, this is exactly what we want and this is exactly why we do it!
Minimising the risk from WEDOS
For our part, we will try to minimize all risks. Let’s try to write down a few key points on how we want to minimize the risks or what we think will minimize them.
It is also in our interest to avoid problems
Yes, that’s probably the main thing that applies now. We are the company’s largest investor. We have the largest investment, which is many times the value of the subscription offered for all shares. It is therefore in our interest to avoid any problems. We would jeopardize our investment and lose tens of millions of crowns.
We want to prevent risks
There are many ways to prevent risks. Let’s try to write down some of them (I’m sure we missed something in our following list). So here are the basic ways we want to prevent risks:
- staff motivation, commitment to results
- innovation of services and offers
- development in other markets, thereby reducing dependence on one market
- providing services in other areas and thus diversifying risk
- market monitoring
- motivation of customers (shareholders) with a loyalty share programme
- Involvement of customers (shareholders) in the decision-making process
- continuation of existing behaviour and practices
Regular information
We want to inform you in detail about everything. We will inform our shareholders more and more frequently than we have done so far. More information, for more stakeholders, is a good way to prevent risks. More heads know, more eyes see.
We are prepared to provide a regular report to shareholders every 3 months on what is happening in the company. Major decisions or major events will be communicated to shareholders without delay.
Maximum openness
Come and see us anytime. We are happy to show you everything, we are happy to explain everything. Personally, you will clearly understand the most about us. You can come now, before the program starts. Let’s try to come up with one group date. You can come back anytime after that.
Our results so far
We have achieved a lot since 1997 and we believe that we can fulfil our plans with the current WEDOS company. We built the largest company in the industry with only “five hundred in our pocket”, while still studying at university (and one of my colleagues even much earlier), whose value exceeded the investment many, many times over. We invested part of the funds raised in WEDOS Internet, a.s..
Our WEDOS Internet, a.s., has become a growth leader on the market in a relatively short period of time, where we are clearly (and unrivalled) the fastest growing company in the industry and we are 3rd. the largest hosting in the Czech Republic. The “bad tongues” say it’s just because of the price, but it’s not. Our low price is our biggest enemy, because some potential clients believe that low price equals low quality… We have established ourselves with high quality and we do not want to retreat from it!
Experience and skills
It may sound hyperbolic, but along with the previous point, experience is the most important thing we can offer. Our backbone team is one of the most experienced in the Czech market.
At the newly built company WEDOS Internet, a.s., we have based everything on our experience from the very beginning. Our service offer, company processes, all technological issues, etc., are based on experience, but in a style that we will not make the same mistakes twice. Everyone makes mistakes.
If you decide to take part in our program, you are basically betting on us, our skills and the fact that we will succeed in meeting our goals, which we will present again in the next article.
Use of funds only for the development of the company
The funds raised by the subscription will be used only for the further development of the company. They are not intended for any redemption of shares of current shareholders, but only for development. We will specify the details of the planned investments.
Of course, we behave economically, because there is no other way.
Increasing the value of the company
The current value of the company, in our opinion, is significantly higher than the price based on the subscribed capital in the commercial register. More is invested in the company in a purposeful and meaningful way than is evident (and registered in the commercial register), all the funds are spent purposefully (purchase of the building, building of the data centre, purchases of servers, development of quality IT facilities…) and of course matters such as know-how, time spent by the founders and staff, experience, customers, contacts, services operated…., the reputation of the company, the popularity of the company and many, many other things are not recorded in the commercial register.
Of course, the value of a company is already increased by not having a single shareholder, but multiple people who trust the company. The value of the company is also increased by having investments without leases and loans, instead of expensive loans and leases that you have to pay back and repay, which are covered by funds raised from shareholders under the subscription.
Of course, we want to continuously increase the value of the company because it is in our interest to do so.
Our behaviour
If you are our customer, you have known us for some time. You know what we do and how we do it. You know how we treat our clients, you know how we treat them. You know how we act in a critical situation. You just know us and you won’t be surprised. Let’s face it. We are looking for customers who share our views. Only one fit to be our shareholder. We are not without fault (for example, we failed with the T-shirt action), but we face the problems head on and do not run away at the first problem.
We don’t want to change too many things in our behaviour (towards the public and clients).
Transferability of shares
The shares are fully transferable without restriction. You can sell (or donate) shares to whomever you see fit, you can trade them, you can dispose of them as you see fit. We didn’t put any restrictions in the statute.
In the future, we will prepare in our administration, for our shareholders, the possibility of direct purchase or sale of shares from other shareholders. We would like to facilitate the transfer process, or even finding a buyer or seller.
Buyback
We wanted to enshrine the repurchase of shares at cost directly into the company’s articles of association. Unfortunately, it cannot be done so easily and clearly because of legal restrictions. We will, however, offer to buy back the shares, the basic idea being that we will buy back the shares if necessary at the purchase price (at which we sold them) within 6 months of the shareholder’s request. A time limit is necessary there because, of course, there is some cash-flow planning in the company. We will redeem the shares for other shareholders or directly for the company (in accordance with the statutory terms). The next general meeting in the future could bring change.
Public marketability
Should we decide to go public on a stock exchange in the future, clients will gain the advantage of public tradability. Unfortunately, the cost of “book-entry” of shares will increase with it. We’ll see how in the future. We’re thinking about that too…
Of course, public marketability can have its downsides. Not only increased costs, but also, for example, greater price fluctuations according to the mood of global stock markets. The price may not, at any given time, reflect the actual value of the share.
Decide for yourself
You have to make the decision yourself. We believe we have fairly informed all interested parties of all the risks. Everyone has to decide for themselves.
Maybe you have something to think about, maybe you are already clear…
Continued next time
Thank you for your attention. Next time, we will explain the other essential points of our programme. Step by step you will learn everything.