It really depends how accretive the transaction is for shareholders.
We know from a recent radio interview with our CEO the company needs $15M which will be raised from public/private markets.
We are currently a going concern.
We are unable to secure traditional debt as we don't have the financials to support it.
We don't have institutional investors for a secondary offering which would give us a higher valuation, and that wouldn't give money to the company.
We lose if this is via convertible debenture debt, as the stock would be continually suppressed, debt converted the shares, and repeated until R/S into oblivion.
We lose if they do an S-3 and try to raise all of this amount on the ** public ** market, since retail investors won't meet the new supply of shares, and institutional investors won't purchase penny stocks trading on the OTC.
That leaves a PPM as the only friendly way to raise the funds. Hopefully this leads to some institutional investors buying in on the stock.
Obviously that will come at a price. $15M is quite a bit of new shares at these prices.
However, that dillution will allow us to:
build out the network by early 2020, start monetizing the network through beefed up sales, allow futher R&D in developing our SaaS and Analytics platform and new proprietary custom protocols, and provide business development opportunities by opening the door for third-party access.
You mention the prospect of a R/S.
Traditional OTC financing is either convertible debt of S/3 on public market sales. This puts so much pressure on prices that more shares are created to convert the debt or raise the money from public markets that the O/S increases to the A/S, the A/S gets increased to grow the O/S, the PPS shrinks, and then the company does a R/S to rinse and repeat.
If we get a PPM, there is a limit to the downside risk of dillution. But the company now has access to the capital to reach our goals.
So let's say:
- the FCC keeps issuing licenses (~200 since June 1).
- awarded applicants join the lease pool.
- license owners converto to Limited Partnership
- network is built
- new customers lead to growth in revenues.
- recurring revenues grow.
- third-parties start selling on the network.
- vast majority of debt gets all but wiped out per 10-K.
All of a sudden, our financials look really good 1 year from now, and we should be trading much higher than we are today, without a R/S.
However, once the financials are on solid ground and growing, I would not be opposed at all to a R/S.
Why?
Because it gets us uplisted allowing institutional investors to drive the price to what the market should provide for similar networks, and the financials would support the growth of the company while required less shares for future growth.
So what would be accretive to investors?
The stock currently trades at a valuation of $80M.
We know the company has plans to acquire 1 billion mhz pop.
The value of that mhz pop is established by global market rates and the latest transactions.
From that, we can gather the mhz pop should be worth anywhere between $1.50 - $3.50 mhz pop. I'll try to post more on this later.
At the current price of $0.36, that would be 41M shares, or approximately 20% additional stock.
Am I willing to give up 20% to grow from $80M to $1.5-3.5B.
You bet.
