$MINE Email to a Concerned Shareholder Regarding R/S and New Share Structure.
From: "V. Scott Vanis" <scott.vanis@minercoresources.com>
Date: September 1, 2015 at 7:03:39 PM EDT
To: Beau Saad
Subject: Re: R/S and new structure
Dear Beau,
In full disclosure, we had a few different options to address the challenges we were facing with regards to capital access and company reputation. The following summarizes our list of options:
1. Stop exactly where we sit (no market expansion, no additional product lines, no tangible growth) and/or fund with our Line of Credit. In this scenario, Avanzar and VitaminFIZZ profits would fund all growth and expansion which would yield a complete build out of Southern California in 2017 (maybe). This also assumes we shut down NYC and London, stop all R&D work and moth ball all other pipeline brands. The LOC is secured by Preferred Shares, and we do not have any room in our share structure to make the LOC lender liquid (if they desire) which virtually dries up the LOC. The advantage is no change which is also the disadvantage, no change equals no growth. I know you would not be content with a regional brand, and neither would we.
2. Increase the A/S over the existing 3,500,000,000 shares. While this temporarily helps the capital requirements, it is a very short term fix and is even more detrimental to our corporate perception (by retailer and financiers) and regulatory bodies. In this scenario, say we increased A/S to 4.0 Billion shares. Assuming a PPS of $0.0025, that is available capital of ~$1,000,000. While $1mil is not chump change, possible financiers with this large share structure and PPS are less than ideal and generally only take the form of debentures aka convertible notes. The advantage of this scenario is a slight and short term increase in growth. The disadvantages are many including a substantial panic selloff on release of 14C which only yields a short term solution.
3. Do a reverse split to address our challenges. The 100:1 split does a few things for our company while mitigating adverse effects to existing shareholders (including me and my team). The advantages of this scenario are many fold including 1) our ability to deal with larger retailers and financiers whom require (even demand) a cleaner structure; 2) we can continue to grow at a responsible pace; 3) this growth capital can be procured at much better terms; and 4) our market should be dominated by shareholders and longer term investors rather than traders with a short term mindset.
The disadvantage of this scenario is the clockwork panic that is created in any market after filing a PRE 14C; but this is a short term occurrence, and we are on a long term plan.
Please note: I am personally the largest shareholder in our company, and I am equally affected by the reverse split of all classes of shares (common, Series A, B & C). So this decision impacted my position in Minerco on equal footing to each and every shareholder.
As for the post RS Authorized Shares being set at 250 million, we do not want to be filing another 14C in the future. You can see what any 14C does to a market. Additionally, the bulk of these shares will be reserved back and not available for day to day operations. Once the 14C is made effective, you will see the inaccessible shares total the vast majority of the A/S.
With respect to a typical OTC market reverse split being the “kiss of death,” I would agree if we were a company with ONLY an idea, NO tangible assets, NO revenues and many debentures on our books. We graduated from the “idea” stage a few years ago. We have assets, revenues and a proven model with which to make a company valuation. We know what our company is worth, and this value should be much more highly reflected with a clean share structure. Our company can be valued by investors and shareholders because of the aforementioned attributes. Without these measurable attributes, a market is solely based on opinion (and often, manipulation). The fact is: Our current large share structure and low PPS plays right into this unmeasurable opinion.
If you have a different scenario that we missed, I would love to hear it.
All plans require goals, checkpoints and adaptations. Our company’s plan is no different. It is easy to say the “model is flawed” or the “plan does not work” after the fact…that is why they call it hindsight. The challenge, whether coaching a team, raising a family or building a company, is to get the plan as close to perfect as possible but then being able to react and adapt to ever changing real-world conditions.
I hope I answered your valid questions to your satisfaction. Let me know if you have any other questions or concerns.
Best regards,
Scott
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V. Scott Vanis
Chief Executive Officer
Minerco Resources, Inc.
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Original Message
From: Beau Saad
Sent: Tuesday, September 1, 2015 4:25 PM
To: V. Scott Vanis
Subject: R/S and new structure
Scott,
In light of yesterdays news obviously us "loyal shareholders" are getting pounded..i want to believe in you and Minerco but my biggest fear is post R/S we are going to be wiped out after the other 215 million shares are sold off into the market... Can you please shed some light/ clarification on whether those are going to be used immediately and to help fund operations? There are so many loose ends that us loyal to the company have questions and concerns about...
Ive invested nearly all of my portfolio into this company to watch it lose consistently...i love the fizz and believe it can become a mainstream product and thats why i came here in the first place...
Thanks
Beau Saad
