July 21, 2022
Letter to our Shareholders
The following is an update on the Company’s progress and the next steps in our business plan.
On April 21, 2021, we brought the company’s reporting current as a Current Information Pink Sheet on OTC Markets. Our plan was to build out a M&A focused holding company with a proper and defensible share structure focused on future shareholder value. On May 22, 2022, we filed supplemental information to have the shell designation lifted off our symbol. We were successful in achieving this undertaking.
In keeping with our plan to build out SBDG as a holding company, we completed 3 outside acquisitions using our signature Soft Leverage Buy Out Model (Soft-LBO).
Stony Hill Advisors, M&A advisory. The firm is very scalable and by employing our overall strategies, it is expected to generate a $100 million in market value and $200 million in portfolio growth for the company over the next 3 years.
Appraisal 3000, Inc., real estate appraisal management.
Ubun2 Group, enterprise software solutions.
These companies were bought with the company’s Series A Preferred stock, designated as a Convertible-Adjustable-Preferred (CAP) with a face amount of $1,000 that carries a floor dividend of 4%, a collar of 12%, and a conversion rate to common at $2.50 per share or alternative redemption after 5 years.
The company will continue to grow its holding by deploying its Soft-LBO Model and M&A centric corporate structure with the following three silos of focus. Preferred shares will be the currency with the Soft-LBO Model.
Portfolio acquisitions of private companies with owners seeking growth and timed liquidity and exit; and
The acquisition of support service companies to provide our portfolio companies with key services, and
Access to capital through a Captive Private Equity fund to be deployed in later 2022 and early 2023.
The acquisition of Stony Hill Advisors, a boutique M&A advisory firm, generates deal flow for the company portfolio acquisition Soft-LBO efforts as well as providing services to lower and middle market business owners seeking transition.
We are moving into the second phase of our business plan with several dynamic components that relate to the acquisition of portfolio companies which are backed by support services and capital access. The concept behind the acquisition strategies is to acquire – build – exit.
We have commenced with the acquisition portion.
The build is to acquire related tuck ins to grow the portfolio thru acquisition.
The exit preference is based on a spinout through a registration and initial public offering that will generate cash and registered securities to be dividend out to the company’s shareholders. Our Current Information Pink status of the company is a double edge sword and is a dynamic component of our overall strategy. Our pink sheet status allows us to make acquisitions without the costly compliance of a registered company such as OTCQB, NASADAQ or NYSE. This allows us to assemble smaller acquisitions we can then shepherd through the process of preparing for a registration.
The Captive Private Equity Fund referred to earlier provides the liquidity capital for acquisitions of between 5% and 35% of the target valuation for preferred securities in a transaction. Small Business Development Group, Inc. provides the balance of transaction costs in its securities in the form of equity and debt. In most transactions the company acquires 80% of the common equity. The seller holds 20% of the equity and remains with the transaction for between 2 and 5 years (providing operational continuity).
The company has defensible share structure:
10,101,011 Restricted 950,651 Unrestricted
873,756 Held by DTC Management controls, directly and indirectly, 6,549,940 or 59% of the company and holds 1 share of Class C Preferred that vote at 4 times the common stock issued and outstanding. SBDG is seeking to attract and retain investors/shareholders with a long view seeking appreciation that can become generational.
The company’s plans, strategies and goals are well thought out and are not based on any secret sauce but rather best practices and fundamentals to take advantage of current economic and political circumstances. The current economic challenges and political discourse will help fuel our growth as investors and business owners pursue solutions in the current climate. The company is positioned to take advantage of the $10 trillion market transfer of wealth in modern history from the Baby Boomer generation, an event that will not be repeated in this century or possibly ever.
The investing public is not aware of our progress because we refuse to engage in investor relations hype and resort to programs to run our stock as many nano and micro companies resort to. We have endeavored to publish press and other content to communicate our progress to the public. In our opinion, “SBDG is the best kept secret in the nano and micro-cap market”. Management’s goal is to achieve a tipping point in the market in which investors will embrace the company’s business thesis of best practices with financial fundamentals. We cannot predict when this will occur, but we are confident it will.
Thank you for your time, support, and consideration.
Roy Y. Salisbury Chief Executive Officer