Its good to see Leung has finally decided after 2 years to put out an announcement but its disappointing to see that he still hasn't learned that investors want to read the truth, not spin.
Leung doesn't do himself or the company any favours by putting spin on yet another one of his failures.
For all intents and purposes nobody believes anything Leung says anymore. This latest announcement only perpetuates Leung's reputation.
For 2 years Leung attempted to increase AIC revenue. This has clearly failed and now to cut losses Leung has decided to shut down 3 out of 4 AIC store front branches.
Leung reports:
....." AIC follows the prevailing business environment to change its focus from brick and mortar to web based online B2C (Business to Consumer) and B2B (Business to Business) business model"...........
Paul Leung, June 29,2015.
There is a plethora of information online that clearly states the best business model is a store front with website. Together these 2 complement each other very well.
People are tactile. They want to see, feel and touch a new product they are considering purchasing. They also want to speak face to face with a sales rep.
AIC is not selling $10 dollar widgets. If that were the case then a website only would probably make sense.
Below is just one of many online articles that make it clear that brick and mortar is essential to growing a business. If you look at any of the other telcos they have an expanding brick and mortar presence.
Wind, for example has about 8 store fronts in Vancouver and they are a tier 3 provider. AIC incidentally doesn't even rate as a tier 4 provider. They are completely off the chart.
https://techcrunch.com/2014/10/31/why-online-retailers-continue-to-open-brick-and-mortar-stores/
According to the above article 78% of consumers prefer to shop in store and spend 6 times more than online.
The closure of 3 AIC branches is not about gaining market share. Its about reducing losses. In that regard I support Leung's decision. AIC is a dog and will likely never be profitable.
In the near term I expect smaller loses with the closing of 3 store fronts. Over the longer term AIC will lose customers as contracts expire and are not renewed. AIC will pick up very few customers with this new business model.
RAZOR THIN MARKET
AIC's target market of new Chinese Canadians who prefer to speak with a Chinese speaking sales person is razor thin. This should have been obvious to Leung from the very start.
Leung wasted 2 more years and a massive block of cash attempting to make AIC profitable.
When you add the 2 years and millions of dollars wasted on what became Empower Defence Systems we see that Leung has wasted the past 4 years and millions of dollars.
This time and money could have been spent on the handwriting patent.
Empowers Deficit
The deficit at the end of 2012 was $30.5 million. 4 years later the deficit after the EDS and AIC debacles is now $34.3 million. An increase of $3.8 million dollars. Is Empower any further ahead after these 4 years? I would say no, especially when you consider the stock is now hovering between 1/2 to 1 cent. In my view Leung wasted another $3.8 million and diluted the stock by an additional 17 million shares.
HANDWRITING PATENT
Leung is still claiming Empower is pursuing the enforcement of the handwriting patent. I hope this is true. I notice in the current announcement he is no longer claiming EPT is consulting with "legal professionals." Was that an oversight or misprint?
What is a legal professional? I assume he means lawyers. Is there any other type of legal professional? If there is actually any value to this patent Leung should have spent the $3.8 million dollars wasted over the past 4 years to enforce it.
AIC isn't going anywhere. I would prefer Leung shut down the entire money sucking operation and pursue the patent, provided there is any value to it. This is something that we simply don't know.
If the patent does have value and if money is the obstacle preventing enforcement then Leung should attempt to raise the money.
Leung could call a meeting and invite patent experts such as the legal professionals Leung claimed EPT was consulting with to address shareholders. They could lay out an entire plan and explain the patents value. The long suffering investors would likely open their wallets again. This would take gonads on Leung's part so its not going to happen but that is how a competent, confident CEO could get things done.
The above submission is my opinion only.