As you may be aware, Competitive Companies, Inc. (CCOP) will “spin-off” its subsidiary Wytec International, Inc., via its SEC Registration Form S-1 becoming “effective” on October 10th, 2017.
What does this means for current CCI Shareholders? Our recent press release states:
“The Company has declared its record date to be November 10th, 2017 with a distribution date of November 20th, 2017. The distribution date provides for all CCOP shareholders of record to receive Wytec shares based on an approximate 388:1 ratio including a 2-for-1 issuance of Wytec low cost warrants. This means that all CCOP shareholders, old and new purchasers, will receive Wytec shares and warrants if they own CCOP shares of common stock by 5:00 pm Eastern Time on November 10th, 2017, but not after.”
Essentially, all CCOP shares that you own as of November 10th, 2017 (the Record Date), will receive at “no cost” a distribution of Wytec Common Shares in the above (approximate) quoted ratio of 388:1. For example, if you own 100,000 CCOP shares on the record date, you will be distributed approximately 257 Wytec shares plus 515 (2-for-1) Wytec warrant shares priced at $5.00 per share. To assist you in the value of this distribution, our in-house accountants have devised a “rate of return” chart to help you understand your position. As an example, if you were to purchase 100,000 CCOP shares @ $.05 per share (currently less than this), you would have invested approximately $5,000. If you were to keep those shares through the record date of November 10th, 2017, you would receive 257 shares of Wytec shares.
According to the latest professional valuation done by Signals Analytics, Wytec shares have a value of $25.00 per share, representing $6,425. If you were to exercise the attached Wytec warrants @ $5.00 per share, you would have invested an additional $2,575 for a total of $7,575 ($5,000+$2,575). If you were to sell these Wytec shares at the valuation price of $25.00 per share upon Wytec’s listing (there is no assurance that Wytec shares will trade at this price or at any other particular price), you would receive $19,300 (772*$25.00=$19,300). According to our XIRR model assumptions, you would earn an approximate 281% annualized rate of return on your investment.
Due to the window of opportunity occurring for approximately 30 days (October 11, 2017 through November 10th, 2017) the price of CCOP shares could go up. Therefore, we created another XIRR assumption if CCOP shares traded for up to $.10 per share. See XIRR model below.
What happens to CCOP shares after the Wytec spin-off? This is the exciting part. The reason the Wytec spin-off is beneficial to CCOP Shareholders is that they were able to receive Wytec bonus shares and low-cost warrants at a significant discount to the appraised value and at the same time, “retain” their CCOP shares.
This means that a Wytec type transaction can be repeated with other companies wanting to go public via a “spin-off” just like Wytec did. There is no limit to the number of spin-off transactions that CCOP can participate in. Our professional advisors are very familiar with this type of transaction and will assist us in locating other companies desiring to go public via a spin-off. The potential additional returns on this type of transaction were not included in the forecasted ROI with Wytec share distributions.
This XIRR Model is calculated on three primary assumptions: Price purchased, price sold, and length held. Thus, if you purchase CCOP shares for less than the example $.05 price, the ROI will increase, if you sell the Wytec Shares for more than $25.00, the ROI goes up. The following example assumes that even if you purchased the CCOP for $.10 per share and sold the Wytec Shares at $25.00 per share you would realize a respectable ROI of 80% per annum. *XIRR is a method for calculating an internal rate of return or annualized yield for a schedule of cash flows occurring at irregular intervals. Model assumes that you held the shares for no longer than one (1) year.
Security Owned CCI Common
Purchase Date October 1, 2017
Share Price $0.100
CCI Shares Held 40,000
Wytec Dividend Shares 104
Wytec Warrants Issued 208
Total Wytec Shares 312
Sales Date July 31, 2018
Wytec Share Price $25.00
Rate of Return 80%
The above rate of return assumes that you purchased CCOP shares prior to November 10th at no more than $.10 per share. The Wytec share distribution is not available after November 10th and the above ROI would not be possible.
The only opportunity to own discounted Wytec shares before its initial trading date is to purchase CCOP shares currently being traded on the Over the Counter market. You must own CCOP shares by November 10th, 2017. After that date, purchasers will not be awarded Wytec shares and warrants.
To learn more about Wytec, please visit our new website: www.wytecintl.com
For further information and/or discussion, please call Tina Ellis at 888-284-4531 or email her at tellis@wytecintl.com.
Sincerely,
William H. Gray
President/ CEO
Forward looking statement The discussions and information in this Memorandum may contain both historical and forward-looking statements. To the extent that the Memorandum contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of our business, please be advised that our actual financial condition, operating results, and business performance may differ materially from that projected or estimated by us in forward-looking statements. We have attempted to identify, in context, certain of the factors we currently believe may cause actual future experience and results to differ from our current expectations. The differences may be caused by a variety of factors, including but not limited to, adverse economic conditions, lack of market acceptance of our products and services, losses from theft, intense competition, including entry of new competitors, adverse federal, state, and local government regulation, unexpected costs and operating deficits, lower sales and revenues than forecast, default on leases or other indebtedness, loss of suppliers, loss of supply, distribution and service contracts with customers, price increases for capital, supplies and materials, inadequate capital, inability to raise financing, loss of customers and failure to obtain new customers, the risk of litigation and administrative proceedings involving us and our employees, loss of government licenses and permits, higher than anticipated labor costs, the possible acquisition of new businesses or products that result in operating losses or that do not perform as anticipated, resulting in unanticipated losses, further dilution of ownership in the Company caused by the issuance of more securities, the possible fluctuation and volatility of our operating results and financial condition, adverse publicity and news coverage, inability to carry out marketing and sales plans, loss of key executives, changes in interest rates, inflationary factors, and other specific risks that may be alluded to in this Memorandum or in other reports issued us.
