Rivulet Media Inc (fka RIVU)

[Airric]

In all of these posts about the preliminary 14C, I'm surprised that almost nobody has commented on the actual contents of the document besides the fact that the A/S will be increased to 5 billion. If everyone would just read the entire document, most people's questions would be answered and their fears subside. Here's a quick breakdown:

The pre-14C gives 2 reasons for the need to increase the A/S:

As of July 23, 2013 the Company has only 1,700,951 authorized but unissued common shares. As such, the Board has determined that the common shares authorized by the Company’s Certificate of Incorporation be increased in order that:

(a) the Company shall be able to issue common shares to Min pursuant to the Agreement
(b) The Company shall have a sufficient number of common shares authorized in order that it may offer common shares as consideration for the purchase and/or licensing of intellectual property.

So let's look at point (a). This is fully explained in detail within the pre-14C. As part of the agreement with Dr. Wei-Ping Min to in-license the Min IP, BMSN must make payments to Dr. Min upon certain milestones being reached:

1. Dr. Min will perform certain tasks for Regen as part of a consulting agreement. As compensation, Regen will pay Dr. Min $100k worth of common stock over a one year period in 12 equal payment. From the pre-14C:

(a) negotiate in good faith with Min with regards to a proposed consulting agreement whereby Min shall perform certain mutually agreed upon tasks for the benefit of Regen for consideration to Min consisting of One Hundred Thousand United States Dollars ($100,000) of the common shares of the Company valued as of the date of issuance and to be paid over a twelve month period in twelve equal installments (“Consulting Shares”) and registered under the Securities Act of 1933 on Form S-8.

2. Upon FDA approval of the Min IP IND, Regen will give Dr. Min 33,333 preferred shares which can be converted to $333k worth of common stock. The number of shares will be determined by the pps on that given day. From the pre-14C:

(ii) Subject to (i) above, upon any date subsequent to the date of the completion of a satisfactory review by the United States Food and Drug Administration (“FDA”) of an Investigational New Drug Application (“IND”) for the Min IP submitted by Regen which shall result in the ability of Regen to lawfully begin clinical testing of the Min IP on human subjects within the United States Min shall be permitted, at his option, to exchange 33,333 of the Assignor Preferred Shares into that number of Exchange Common Shares having a value of Three Hundred Thirty Three Thousand United States Dollars ($333,000) such shares being valued at a price per share equal to the closing price as of the day written notice is given by Min to Regen of Min’s intent to exchange.

3. Upon development of the manufacturing procedure for the Min IP drug, Regen will give Dr. Min 33,333 preferred shares which can be converted to $333k worth of common stock. The number of shares will be determined by the pps on that given day. From the pre-14C:

(iii)
Subject to (i) above, upon any date subsequent to the date that manufacturing procedures for the manufacture of the Min IP have been developed by Regen which comply to the Current Good Manufacturing Practices (“cGMP “) requirements of the Food Drug and Cosmetics Act of 1938 and the rules and regulations promulgated thereunder as they may apply to the manufacture of the Min IP Min shall be permitted, at Min’s option, to exchange 33,333 of the Assignor Preferred Shares into that number of Exchange Common Shares having a value of Three Hundred Thirty Three Thousand United States Dollars ($333,000) such shares being valued at a price per share equal to the closing price as of the day written notice is given by Min to Regen of Min’s intent to exchange.

4. Upon completion of a clinical trial protocol for Phase I and a Principal Investigator has been appointed, Regen will give Dr. Min 33,333 preferred shares which can be converted to $333k worth of common stock. The number of shares will be determined by the pps on that given day. From the pre-14C:

(iv) Subject to (i) above, upon any date subsequent to the date that, in connection with a lawfully administered Phase I clinical trial of the Min IP being conducted by Regen within the United States on human subjects, both of (1) a clinical trial protocol has been completed and (2) a Principal Investigator has been appointed, Min shall be permitted, at Min’s option, to exchange 33,333 of the Assignor Preferred Shares into that number of Exchange Common Shares having a value of Three Hundred Thirty Three Thousand United States Dollars ($333,000) such shares being valued at a price per share equal to the closing price as of the day written notice is given by Min to Regen of Min’s intent to exchange.

5. Upon successful completion of Phase I clinical trials, Regen will give Dr. Min $1 million worth of common shares. The number of shares will be determined by the pps on that given day. From the pre-14C:

Subject to sufficient number of common shares having been authorized for issuance by the Company, Min shall receive, upon successful completion of a lawfully administered Phase I clinical trial of the Min IP being conducted by Regen within the United States on human subjects, the results of which (1) shall indicate that the Min IP can be safely tolerated by human subjects (2) shall not indicate that use of the Min IP in human subjects result in side effects of such severity that commencement of a Phase II clinical trial could not occur, and (3) establishes the optimal dosage and/or method of administration( as applicable )of the Min IP , Min shall receive that number of the common shares of BMSN which, at a price per share equal to the closing price of the shares as of the day of issuance, shall equal One Million United States Dollars ($1,000,000)

So what does the above all mean? It means that BMSN will need plenty more common shares than what they have available in order to fully compensate Dr. Min. To illustrate the point, if you used today's pps ($0.0038), all of the compensation above would total over 552 MILLION common shares! The good thing about this is it is all performance based. If the Min IP does not get FDA approval, then BMSN is not on the hook for any of the above payouts. Obviously, as long shareholders, it is in our best interest that Dr. Min gets a boat load of shares, because that means the Min IP is well on it's way to potentially making Billions of dollars and lots of profits for shareholders. Also, as these milestones are completed, the pps will be a WHOLE LOT HIGHER than what it is today, therefore the number of shares required to compensate Dr. Min will be SIGNIFICANTLY LESS than the 552 million it would take at today's pps.

As far as point (b), my personal take is that they want the flexibility to be able to purchase/license more IP's like the Min IP, with common stock. This will require a significant amount of shares, as evidence above by the amount of shares required to pay Dr. Min for his IP.

Bottom line, this is not the horrible "end of the world" event that bashers are making it out to be. Just because they are increasing the A/S doesn't mean they will issue all of it or any where near all of the unissued shares. To give an example, another stock I am invested in, JAMN (aka Marley Coffee) has a little over 5.1 Billion A/S, yet their O/S is only slightly north of 90 Million. They've had over 5 Billion A/S for years, yet they've only increased their O/S slightly over that same time frame for some financing deals. Point is, O/S does not always eventually equal A/S.

Sorry for the length of the post, just hope to help other members understand better and not fall prey to fear mongering.