Replies to post #2185 on 5BARz International Inc. (fka BARZ)

[As I See It]

roguewave5 asked:

"One thing I'm wondering about though is, if they are actually doing an IPO in Canada, are these still the same Shares as we see on the OTC? I don't know how this works. In the update from last October it says, once the Dual Listing is in effect, the Shares will be traded simultaneously on both exchanges".

There are two parts to your answer. First, 5BARz is in the process of raising money in Canada by issuing more shares of 5BARz Int'l stock (a secondary offering would be a more accurate description than an IPO). These shares will be identical in every way to the ones trading currently on the OTCQB. The offering will add to the total shares outstanding. Each share will have the same ownership claims and rights as the existing shares. The shares on the TSX-V will trade in Canadian Dollars that should approximate the U.S. Dollar amount per share. Arbitrageurs will see to that. If the back office of your brokerage firm is set up to clear trades on the TSX-V (probably not) you could trade your current shares there if you wanted to.

The second part is why bother with the TSX-V?? Just like many U.S. based Brokers won't accommodate the trading of U.S. based penny stocks, there are many countries like India whose brokers are not set up to clear trades on the OTCQB. The TSX-V has a much broader international footprint including India. It only makes sense to make the shares of 5BARz easily tradable by potential investors in other countries, particularly India. Another extremely important reason to list on the TSX-V is the possibility of analyst coverage. That never happens on the OTCQB. Daniel Bland has also been very successful at raising money in Canada before and has a close relationship with the Canaccord Genuity Group.

More of my theories below.

I think part (I don't pretend to have all of the answers) of the failure to raise money has been an unwillingness to give up what Gil and Danny thought was too large a portion of the company in exchange for that financing. Early on, I think they had several offers that look great in hindsight, but decided to holdout for better terms. When that didn't happen, they thought the short term debt financing option that could potentially turn toxic would be a good non-dilutive solution to buy them enough time to further strengthen their position. They were confident that they could attain a stronger negotiating position for more permanent financing in plenty of time to pay the debt off before it turned toxic. That backfired further weakening their negotiating position. Remember, Danny is the largest shareholder with 40 million shares. It is in his best interest to make the best financing deal possible. With the caveat that I am not privy to the full story and using hindsight and guess work, it appears that they have made a lot of bad decisions by being overly optimistic about the time it would take them to get product to market. The weaker the company gets the less attractive the offers for financing become. It is a vicious cycle. It may not be so much the inability to raise money, but more a case of not wanting to pay too steep of a price. Fortunately, I think the products we are offering the Telcos are strong enough to enable this company to survive and still be extremely profitable.