Following the cancellation of the Sphere 3D merger, why did you engage in the announced restructuring?
As in any merger and acquisition there are always regulatory and related uncertainties that the parties cannot control. Knowing that, RAKR always considered back up plans to continue to satisfy its mission to be a global leader in delivering Water-as-a-Service (“WaaS”) projects. Restructuring plans would have been pursued in any case to improve access to capital, reduce debt and generally shore up the balance sheet.
What is the net financial effect of the restructuring?
The restructuring reduces 5.5 million USD in debt and liability (62% reduction) and includes obligations under previous royalty agreements of 1.97 million USD.
What is the impact of reducing the shareholding in the Netherlands-based manufacturing entity (“RHBV”)?
RAKR exclusively retains the high margin and WaaS business as a result of the restructuring while R and D and related expenses remain in RHBV. Dutch owners of RHBV retain a significant ownership in RAKR while RAKR retains a large but non-consolidated interest in RHBV. RHBV as a private entity has greater access to European and Netherlands-based capital and public grants that will significantly contribute to lowering costs in the long term. RAKR will benefit fully from these dynamic changes with its cost-plus based product pricing that is not materially different than if the restructuring did not happen. All parties involved and shareholders of both entities stand to material gain from this restructuring in the short, medium and long-term.
Why are audited financial statements so important? As announced on April 15, 2021, we have now completed three years worth of audited financials. It is very rare for OTC Pink® to have audited financials and it is a major milestone to up-list to the OTCQB®.
What are the other requirements of up-listing to the OTCQB® and what progress have you made to date? The requirements relate to a series of initial and ongoing filings of documents that describe the business and financial characteristics of RAKR. As part of the previous transaction we made significant progress in that regard and we are now hitting the ground running. Other requirements relate to governance (minimum of 2 independent directors) – we are in the process of reconstituting the board to 5 members with at least 2 independent directors and independent directors managing the audit committee. Other requirements relate to legal and administrative type declarations, i.e., no bankruptcies, minimum number of shareholders etc. We are in the process of working with our legal counsel to submit the necessary documents to become fully SEC reporting.
What is the benefit of up-listing to the OTCQB®? There are several benefits to up-listing. For investors, the requirements and level of transparency and reporting substantially exceeds that of OTC Pink® (https://www.otcmarkets.com/corporate-services/get-started/otcqb). As part of the previous transaction, Rainmaker made substantial progress to meet these requirements and will expeditiously pursue this new listing. The benefits to Rainmaker are also substantial. Institutional investors will be fully able to finance the Company using favorable debt financing. It will also facilitate an expanded shareholder base and access to finance will further stabilize the future of Rainmaker.
How long will the up-list take? It is not possible to exactly predict because a filing entity has to respond to the SEC questions. However, given that we have prepared a significant amount of the work to date we are in a good position. We will need to deliver unaudited first quarter financials (anticipated in 30-45 days from April 15, 2021) and at that time we will file accompanying documents and typically it will take 60—90 days from that point.
What are the next major operations milestones? As we emerge from the global difficulties of Covid-19, our next major milestones fall into three categories: 1) Deploy our on-site teams to fully execute our existing projects; 2) Continue financing, restructuring and up-listing activities as described above; and 3) continue to work with our business development partners to expand our global WaaS footprint.
What happens to my RAKR shares following the restructuring? Nothing changes with respect to your current RAKR holdings. They continue to trade. As per our press releases on March 11th and April 6th of 2021, we will continue to pursue our original vision of deploying environmentally sustainable technology, taking it to market, and creating liquidity. As part of the asset restructuring, 20 million RAKR shares will be returned thereby reducing the total number of issued shares.
What will RAKR do now? What direction will RAKR take? Our vision continues to be to develop our relationships in the Environmental Sustainability sector in the interest of our shareholders to generate value. The focus of Rainmaker’s co-founders has always been and will continue to be deploying environmentally sustainable technologies in the pursuit of delivering clean water to water scare regions. Our restructuring and pending up-listing to the OTCQB® will facilitate access to capital to pursue our vision.
What is left in RAKR? RAKR now has a much stronger balance sheet and retains global exclusive rights to use RHBV products at the same previous cost, all in the global pursuit of WaaS projects for the benefit of communities and commercial entities in need. We retain a significant equity interest and management interest in RHBV and have secured long term cost-based pricing for RAKR products ensuring the profitability of both entities.
Can I still buy RAKR shares? Yes.
I have e-mailed or called with specific investment questions that have not been made public. Why is no one responding to me directly? We will continue to release material information to all shareholders using the appropriate protocols of the OTC. We will regularly communicate to all shareholders through our CEO, Michael O’Connor.
For more information:
Michael O’Connor
Chief Executive Officer
Rainmaker Worldwide Inc.