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Investor RelationsInvestor Relations
IR Best Practices for Entrepreneurial & Development-Stage
Companies
September 22, 2015
Investor Relations
Agenda
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I. OTC Markets Group Overview
II. LHA Overview
III. Issuer Shared Attributes
IV. IR & Capital Markets Strategy
V. Program Execution: Tactics & Tools
VI. Setting Expectation & Defining Success
VII. Questions & Answers
Investor Relations
About OTC Markets Group
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Our Mission:To create better informed and more efficient financial markets
What We Do:OTC Markets Group Inc. (OTCQX: OTCM) operates Open, Transparent and Connected financial markets for 10,000 U.S. and global securities.
Through our OTC Link® ATS, we directly link a diverse network of broker-dealers that provide liquidity and execution services for a wide spectrum of securities.
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OTC Markets Group’s Regulated Markets
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The Venture Market
The Best Market
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America’s Venture Marketplace
OTCQB provides efficient public trading for companies to start building shareholder liquidity today and develop into tomorrow’s leaders
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950+ companies
$74.2 billion total market cap
$12.8 million median market cap
10 broker-dealersmedian per security
Investor Relations
About LHA
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A leading independent investor relations consulting agency committed to serving small-cap companies across multiple industry sectors.
• Partners with public and pre-IPO companies • Implements custom-designed IR programming utilizing best practices
• Comprised of seasoned professionals • HQ in New York, offices in Los Angeles & San Francisco• Founded in 1984
Strategic IR Counsel
Non-deal Roadshows
Investor & Analyst Targeting
Communications & Positioning
Capital Markets Advisory
LHA builds awareness, enthusiasm and sponsorship amongst the right target audiences to maximize shareholder value.
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IR Review of Entrepreneurial & Development-Stage Companies
Frequent Attributes
High-growth business opportunity
Concentrated ownership
Ongoing need to raise growth capital
Quest for OTXQX or national exchange listing
Support of multiple advisors
Frequent Challenges
Limited float and/or low trading volume
Under Wall Street radar, need advocates
Capital market relevance
Financial partners to bridge to mainstream investors
Common Goals
Generate awareness
Enhance credibility
Build sticky shareholder base
Secure M&A and growth capital
Execute aspirational IR programming
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Lean infrastructure, reliance on specialists
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Conduct IR Assessment
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Is this being communicated to the investment community?
What is the business plan
and role of public listing?
What are the projected
milestones and risks?
What is the role of “native” supporters?
What are the capital
structure opportunities
and limitations?
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Develop IR & Capital Markets Strategy
I. Create a roadmap and timeline to achieve objectives.II. Understand current capital structure and options to raise capital.III. Choose the right advocates:
i. Banker(s) ii. Advisors
IV. Create an IR plan and calendar.i. Continue to reinforce investment rationale in communications.ii. Ensure sustained outreach and multiple touch points.
V. Report progress to the board.
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Position company upgrade to OTCQX or list on a national exchange.
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Conduct Competitive Assessment
I. Define the peer group.II. Audit peer group and compare.
What are the gaps and are they intentional, differentiating or discrediting?
Topic Consideration Peer Industry competitor, similar stage in lifecycle, aspirational role model
Disclosure Frequent or modest transparency
Guidance Yes or no, annual or quarterly, range or specific, dollars or percentage change
Metrics Financial and non-financial (number of customers, patents, products, etc.)
Key messages Differentiating points and similarities
Collateral Elements included in presentation, fact sheet and website
Events Investment banking conferences and trade shows
Spokespeople CEO, president, CFO or other
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Define a Unique & Durable Message
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Establish key messages punctuating differentiation and milestones.
What is your investment rationale?What is your investment rationale?
What are the unique attributes? What are the unique attributes?
What is the immediacy?What is the immediacy?
What is the hook?What is the hook?
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How Do Investors Find Your Company? What Do They See?
I. Where do investors find you? i. Research reportsii. SEC filingsiii. Financial databases
(e.g., Bloomberg, Yahoo!Finance)iv. Company websitev. Financial resources
(e.g., Seeking Alpha, Konlin Letter)vi. Social Media
II. Evaluate the information: i. Is it accurate and complete?ii. Is it compelling?iii. Is the site mobile compatible and search
engine optimized?
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“You never get a second chance
to make a first impression.”
- Mom
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Complementary Communications
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CorporatePresentation
Press Releases IR Section
of Website
SEC Filings
Proxy
Shareholder Letters
Trade Presentation
Quarterly Financial
Disclosure
Social Media
Corporate Website
Conference Calls
Non-deal Roadshows Fact
Sheet
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Leverage Press Releases
I. Conduct a litmus test on topic: i. Is it material information? ii. Does it demonstrate progress in mission? iii. Does it grab investors’ attention?
II. Vet with disclosure committee.III. Implement post-issuance protocol.
i. Connect with important shareholders, targets and financial intermediaries. ii. Track contacts and responses.iii. Update target lists.
IV. Post to the website and use social media to extend reach.
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Seize every opportunity to prove execution and reinforce investment rationale.
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When to Begin Conference Calls?
I. Purpose:i. Provide overview of strategy.ii. Update on milestones and progress.iii. Announce significant event.iv. Reach various constituencies: Investors, employees & customers.
II. Considerations:i. Event driven or quarterlyii. Live Q&Aiii. Costs vary
III. Best practices:i. Conduct Q&A.ii. Webcast for 90 days to year.iii. Incorporate speakers:
Management to demonstrate depth & third parties to validate.iv. Plan and REHEARSE!!!
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Initiate, when ready, the most important communication for majority of issuers.
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Plan to Support Vision with Results
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Date & Time Duration Activity Tues, 7/14 10:00 am ET/7:00 am PT 1 hour Brainstorming/ Quarterly reviewFri, 7/17 12:00 ET/9:00 am PT 1 hour Review press release & script outlineThurs, 7/23 11:30 am ET/ 8:30 am PT 1 hour Script reviewFri, 7/24 10:00 am PT/7:00 pm PT 1 hour Review callTues, 7/28 11:00 am ET/8:00 am PT 1 hour Review callThurs, 7/30 11:00 am ET/8:00 am PT 1 hour Review documentsTues, 8/4 11:00 am ET/8:00 am PT 1 hour Finalize drafts & RehearsalWed, 8/5 4:00pm ET/1:00pm PT 1 hour Rehearsal Thurs, Aug. 6th 5:00 pm ET/2:00 pm PT 1 hour Q2’15 Earnings Conference Call Thurs, Aug. 6th 6:00 pm ET/3:00 pm PT ½ hour calls Debriefing calls
July / August 2015Sun Mon Tue Wed Thu Fri Sat
July 12 13 14 15 16 17 18
Q2 Brainstorm / Quarterly review
Preliminary consolidated financials ready
Release and script outline
review July 19 20 21 22 23 24 25 Script review Review Call July 26 27 28 29 30 31 Aug. 1 11ET/8 PT –
Review documents Release ready
for AC Aug. 2 3 4 5 6 7 8
Finalize documents
AC MeetingRehearsal
Rehearsal Issue results Conf. Call Debrief calls
Additional Debrief Calls
Practice makes perfect!
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Provide Perspective & Get Feedback
Advisory Press Release Q&A
Call Script Feedback
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Create Compelling Collateral
I. Presentation: Comprehensive What, Why, How, When & How Much to educatei. Investment rationale ii. Business overviewiii. Industry trends, dynamicsiv. Differentiating characteristicsv. Growth strategy & milestonesvi. Management teamvii. Income statement highlightsviii. Balance sheet & capital structureix. Target business modelx. Investment highlights again
II. Fact sheet: Condensed two pager to grab investor attention
III. Website: Full access to enable due diligence
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Collateral materials are essential for attracting investors.
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Support Investment Rationale
Provide audience-appropriate detail in 20 minutes.
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Deliver the Message Quickly
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Growing technology company highlights scalable model.
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Emphasize Key Investment Points
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Pre-revenue healthcare company highlights market shifts.
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Strive to enable one-stop investor-info shop on website.
Help Investors Get Desired Info
Limited Information FAQs Worth Emulating
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Avoid website pitfalls:• Missing IR presentation & fact sheet• Off-site SEC filing access• Unresponsive inquiry management
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Conduct Smart Outreach
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Optimize management’s time by targeting the right audience.
Customize Target List
Set target parameters
Research investor profiles
Strategize time & location Conduct
Non-deal Roadshow
Pitch company
Set meetings
Manage logistics Plan Next
Steps
Gather feedback
Refine lists
Update presentation
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Other Areas Requiring Best Practices
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Missed Expectations
Bear BlogsAnalysts
Days
Activist Investors
Social Activists
Inquiry Management
M&A Transactions
Commercial Research
Social Media
Bad Press
Crisis Communications
Exceeding Expectations Annual
Meetings
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It’s All about Setting & Managing Expectations
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Investment Community
Board of Directors/
Employees
Management
Communication and transparency are essential.
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How to Define IR Program Success
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Stock Price
Improved Street
perceptions
Success in expanding audiences
Efficient execution of
the plan
Opportunities created,
challenges managed
Quality of collateral
Market Cap
Issuer
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Thank you!
Questions & Answers
John HeilshornPartner
Bob PowerVice President
Corporate Services [email protected]
Corporate [email protected]
Investor Relations
LHA Investor Relations
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Keith L. LippertPartnerNew York [email protected]
Jody BurfeningManaging Director New York [email protected]
Kirsten ChapmanManaging Director San Francisco [email protected]
Bruce Voss Managing Director Los Angeles [email protected]
Robert Wotczak EVP Capital MarketsNew York [email protected]
New York Office800 Third Avenue, 17th FloorNew York, NY 10022212.838.3777
Los Angeles Office2121 Avenue of the Stars, Suite 2970Los Angeles, CA 90067310.691.7100
San Francisco Office44 Montgomery Street, Suite 1310San Francisco, CA 94104415.433.3777
