Sunday, 23 April 2017


Forward Looking Statements. This CEO Blog contains certain forward-looking information and statements within the meaning of applicable Canadian securities legislation. Certain statements contained in this blog may contain such words as “anticipate”, “could”, “Continue”, “should”, “seek”, “may”, “intend”, “likely”, “plan”, “estimate”, “believe”, “expect”, “will”, “objective”, “ongoing”, “project” and similar expressions are intended to identify forward-looking information or statements. In particular, this blog contains forward-looking statements regarding the Rights Offering, the amount of funds to be raised pursuant to the Rights Offering, and may include information perceived by the reader to be expectations regarding the business, operations and revenue of the Corporation in addition to general economic conditions. Although the writer believes that the expectations and assumptions on which such forward-looking information and statements are based are reasonable, undue reliance should not be placed on the forward-looking information and statements because the writer can give no assurances that they will prove to be correct. Since forward-looking information and statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, competition, and uncertainties resulting from potential delays or changes in plans with respect to development projects or capital expenditures and changes in legislation, including but not limited to tax laws, royalties and environmental regulations, stock market volatility and inability to access sufficient capital from external and internal sources. Accordingly, readers should not place undue reliance on the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive.  The forward-looking information and statements contained in this blog are made as of the date hereof and the writer undertakes no obligation to update publicly or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. 
I get asked many times, "why are you proposing a Rights Offering to finance RZX"?  (Please keep in mind, this is adjunctive to the proposed Debenture Offering that has been arranged)

My answers - not comprehensive by any means:
  1. It is a method to allow shareholders that have been loyal to the company for many years, an opportunity to keep their stockholdings non-diluted as a percentage of the outstanding.  There are also many other reasons, which I will do my best to describe herein.  **As a matter of record, this method is complicated to some, when compared to the typical Private Placement method used for decades in Canada.  In other jurisdictions (like Britain or Australia) the Rights Offering is more commonplace. 
  2. It is a liquid method of financing by equity, as compared to the 4-month hold and then the potential "bottle-neck" of supply-demand at the end of 4 months.
  3. It allows the traders a more liquid entry point to a company that they follow, while at the same time, assisting in the capital flow to the Issuer.  **see the following table as a SAMPLE scenario.

I also get asked:  "When would you receive the funds from Rights Offering exercise"?
  • The funds are available to the Company from the Transfer Agent (Computershare) a few days after the Rights expiry date.  **see the following table as a SAMPLE scenario.
  •  There are certain possible scenarios that would be beneficial to the Company, but are by no means assured.  One such scenario is this:  A significant shareholder who wishes to exercise is not required to wait to expiry date to exercise, but may exercise at any time during the process, once the Rights are on Record.  This scenario may be beneficial to the Company in a situation where the shareholders wishes to exercise a portion of his/her holdings, and hold remaining rights to exercise at or near the expiry date.  **keeping in mind that there is a few days prior to expiry date where the other shareholders may be requesting "Step-up Privilege".
I also get asked:  "At what price will the Rights trade?"
  • That totally depends on the trading price of the common shares during the Rights Offering.  **see the following table as a SAMPLE scenario.
 In summary:  There are reasons for a company to be public.  They are primarily for liquidity for shareholders, and also the fact is there are many other reasons, such as:  (**source of the following 5 points is:
  1. Raising capital is usually easier.
  2. Acquiring companies.
  3. Attracting Top Talent.
  4. Increasing Value of Company.
  5. Brand Equity.
>My additional comment:  EXIT STRATEGY.
The following is a SAMPLE scenario.  It serves for DISCUSSION PURPOSES ONLY.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities

IF, AS & WHEN Date of Press Release announcing Record Date Ex-Rights trades Record Date Expiry Date Application to trade Warrants derivative time value Comments
Dates 2017-04-26 2017-04-30 2017-05-03 2017-06-02 2017-06-07
If April 26th is the date of Press Release announcing Record Date then all other dates are relative
Common Shares trading price $0.36

Trading price of common stock is directly related to the trading price of the Rights, keeping in mind the “Time & Unit Value”
Rights (6 rts for 1 unit) no trades $0.0267 $0.0267 $0.0267
+ (time value) Premium on price of trading of Rights is related to Time and Unit Value perceived
Warrants (1 wt. Per unit)

$0.11 + (time value) Premium on price of trading of Warrants is related to Time and Unit Value perceived

6000 $0.36 $0.20 $0.25 $0.16 $360.00
Example: Value of common shares
6000 $0.0267

Unit Price

6 Rights to exercise 1 Unit. (Unit = 1 common + 1 Warrant)

$360.00 $0.00 If calculation (36 cent stock price equals 2.67 cent Rights value – no time or warrant value included)

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