Dear RD and Snow,
ITUP and CCAC (Cow Capital Acquisition Corp) are totally separate entities.
How come IPO of CCAC will payout the dividends that Interups promised its shareholders be it be any quarter that the IPO rolls in especially when the SEC regulates that 95%-98% of the SPAC Money should sit with administrator pending business combination.
The reason why we are going for SPAC IPO is to give this fundamental confidence to the public investors that their money is back if we do not do business combination... And If that is what the regulator expects how can we even draw money leave dividends, rather, for any purpose...until we do WM merger.
Then why we are doing SPAC IPO? --- To convey to the acquiring prospective WM Firms that there is cash chest sitting with us to acquire and Proof of funds is visibly displayed as that sits in treasury management account.
On dividends that ITUP promised ---
(a) Cash Dividend
(b) Stock Dividend
ITUP is sponsoring CCAC and as I have notified, it will gain 6 out of the 20% equity post IPO of the Cow Capital and 50% of that 6% of post IPO capital is given off to ITUP Shareholders in the ratio of their holding. Now that we have announced the IPO Date to be Oct, this part of obligation stands confirmed as soon as we file S1 on Cow Capital. We are declaring IREEM LLC as Sponsor in which shareholders of Interups will become members along with other strategic investors. This addresses the (b) and we are on time for this, with one IPO portion of stocks getting allocated to ITUP Shareholders much prior to the actual IPO date, at the time of filing itself.
Now, The cash dividends part, if you recollect we promised $0.25 to $0.40 cash dividends as the initial payout. If you recollect we promised this in this quarter as payout and we maintain this as quarterly payout.
There is a definite reason for us to undertake this action as payout will boost confidence among our investor group and eases them have some cash flows that they otherwise got blocked in ITUP. In my decades of experience, this wins loyalty. And I bet, part of these dividends will get ploughed back into IPO subscription silently which may not be much but it will...
Then, when we will announce?
In one recent message, I have conveyed to the shareholders that we we are self-underwriting the IPO. Typically this will save 5.5% to 6.5% underwriter fee conserving cash flows especially when we have a strong investor base. Total shares of Interups prior to expansion is 6.9 Million and this saving itself will mean almost 100% of the cash dividends safely ensured (6% of 115 M IPO including over-allocation payable otherwise as underwriter discounts), which in dollar terms account for $1.00 per share while our promise to the shareholder is $0.25 in this quarter. Underwriters expect that we escrow this money before we file the s-1. The same money, instead of escrowing to someone who will share no emotions with us but just make fees out of us, we distribute a portion as dividends and keep the rest towards working capital as that will give us Placement Warrants on the working capital we subscribe in the SPAC. Interups sponsoring 25% of the 14.4 Million working capital planned into the SPAC until combination and this means 2.4 Million warrants in addition that will have 2.4 m x listed market rate vs 2.4mx$1.5 investment made.
Now out of the 6.9 M shares outstanding, I hold 52% and my partner holds 26% -- even assuming we may have to pay to few of our internal group investor members this is not be more than 10%, which means outside investor payout on dividends is 100% - (52% + 26% - 10%) => 32%.
25 cents on 6.9 million is $1.725 M (40 Cents is $2.76 M).
Out of this our actual cash outflow is 1.725 / 2.76 x 32% => $552,000 to $883,200.
Because dividends that we payout on my personal holding will plough back to us...zeroing any net effect on the outgoing cash. Assuming that we set aside the whole of 1 year dividends ($1.00 to $1.60 per share), still the outflow this year remains not more than 32% of 6.9 m to 11.04 M => $2,208,000 to $3,532,800 whereas we are saving $6.9 Million out of underwriter fee savings itself...
Then what is the delay--
I am just waiting for determining what portion of the IPO public and strategic investors will cover and this we will know during the test waters time period that SEC allows us. Gauging this will help us determine if we could pay $0.25 or $0.40 in this quarter.
As written before, I am ambitious that we pay $0.40 per share and there is a reason for my wish. We have extended additional sponsor shares in cow capital to ITUP Shareholders for $0.15 per share and this is receiving tremendous response (There is no loss for the company as we gain these sponsor shares @ $0.0001 per share and we are extending this to our internal members @ $0.15). An interested ITUP shareholder who is subscribing to the offer will actually recover back money from and out of he $0.40 cents and he will be able to still retain $0.25 cents cash dividends for himself.
What is the underlying benefit --- The share and the warrant immediately on SPAC IPO is valued at $10.00 and $11.50 even without considering market dynamics as SPAC IPO issue price is $10.00 and warrant price is $11.50, whereas ITUP Shareholders would have paid $0.15 per share and $1.50 to subscribe each warrant that earns them exercise of cashless warrants. Even if SPAC share turns undervalued on the market and goes less than issue price until combination triggers, it makes no difference to ITUP shareholders who subscribe to he sponsor shares and attached warrants for $0.15 and 1.5 respectively. Someone questioned me what if the spac stock falls below issue price to around $7.50 per share...I told him it is still a $7.50/0.15 multiplicity. I believe most of the shareholders recognized this underlying value and I thank everyone... I have gestured this as I know almost everyone has a buying price of $2.00 + on ITUP and they are blocked of this money for more than 2 years... thanking them, offering these additional shares, is like my return gift to all.. as Sponsor allocation limits the number of shares one will exchange for ITUP shares.
I hope my detailed explanation summarized One to safely assume we do have this capacity to pay out dividends ---> $552,000 to $883,200 is in effect 8 to 12.8 cents outflow vs 25 to 40 cents ...and this math should sufficiently comfort everyone that we will pay this out of our brilliant math work execution, to the merit of building shareholder value in absolute terms.
Laxmi Prasad
AI
