The listing of RealStew on both the NZX (New Zealand) and AIM (London Stock Exchange) Boards in 2015 Preamble It has been the stated objective of RealStew to list the business on both the New Zealand and London Stock Exchanges (AIM). It is our intention to complete both listings in 2015. Purpose of the Listing The purpose of the listing is fourfold;
To present the shareholders who have contributed capital over the years with an opportunity to secure a market value for their shares and, should they wish, release capital from the sale of some of their shares; To increase the corporate and business profile of RealStew; To raise capital (AIM listing) to fund the growth of the Platform; To secure a value for the shares that will facilitate the growth of RealStew as an enterprise with strategic acquisitions, using a combination of cash and equity to fund the acquisitions;
The benefits of a dual listing The benefits of listing on the NZX first and then the AIM board are:
To Reduce Costs: It is substantially cheaper to list on the NZX board first where we have no intention of raising capital. Consequently, the compliance requirements are less. Once we have the listing, and have accrued a few months track record, we are better prepared to meet the more onerous corporate compliance requirements that the AIM (London Stock Exchange) board set.
To minimize Equity dilution : It is our intention to raise GBP15 – GBP25 million (nearer the time we will determine the amount) when we list on the AIM board and this will be done by issuing RealStew shares to the institutions / investment houses that would be interested in participating in the placement. The number of shares available to issue will depend on a combination of the existing market price of the shares (as traded on the NZX at this stage) and what ‘discount’ premium we would need to give up to secure the interest of the new shareholders. Having an existing traded bench mark price for the shares will make the task easier and reduce the number of shares which have to be issued to raise the capital;
To Increase Our Profile: Listing on the NZX is a good entry point into the financial market and will be an excellent opportunity to establish a presence and a corporate life as a listed entity. However, listing on the AIM board as well, introduces RealStew to a much larger investor pool that would be prepared to invest in RealStew. This is important and fulfils our stated objective to become one of the World’s largest communication Platforms.
CORPORATE STRUCTURING Pursuant to the resolutions passed by RealStew Connect Limited on the 8
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reaffirmed on Thursday the 10 July 2014, with effect from midnight GMT on the 31 March 2015, RealStew will commence trading, as a going concern, from RealStew Limited, UK, which is an incorporated entity registered in terms of the company laws of England and Wales. All legal, administrative and commercial transactions relating to sale/ transfer of the business and the intellectual property plus the redemption of the RealCoin Warrants will be completed before the Trading date. The management of the technical team will be directed from New Zealand with team members in New Zealand, India, United Kingdom and South Africa. Support will similarly be managed from New Zealand with a representative presence in the United Kingdom, South Africa and in the course of 2015 an office will be opened in West Africa and the United States. Financial, secretarial and administrative services will be directed out of the United Kingdom as will the main thrust of the strategic marketing.
SHARE REGISTER AND REALCOIN WARRANTS REDEMPTION The corporate structuring includes the redemption of the RealCoin Warrants that have th been issued in various stages since the 4 July 2013. The RealCoin Warrants will be redeemed by the issue of fully paid shares in RealStew th Connect Limited. As per a resolution of the company passed on the 8 April 2014 and th reaffirmed on the 10 July 2014, each NXZ$1-00 RealCoin Warrant will be redeemed in exchange for 70 RealStew Connect Limited ordinary shares. The conversion and redemption of all RealCoin warrants and previous shareholders of RealStew Connect Limited will take place at Midnight GMT time on the 31 March 2015 with the shares to held on behalf of RealCoin Warrant holders by RealStew Limited (UK), as a nominee. th
On or before the 15 April 2015 RealStew will publish on the web a capture screen, as detailed below, and all previous Foundation Club Members and RealCoin Warrant th holders will be invited and asked to complete by no later than 30 April 2015. Their online registration of the addresses can then be used in the Share Register.
THE NZX RULES AND DATA DISCLOSURE The rules for securing a NZX listing on the NXT market (junior board) are inter alia the support and endorsement of a listing Adviser, accredited by the NZX, to manage the process. The accredited listing Adviser, also referred to as a Sponsoring Broker, needs to be comfortable about supporting the listing and in particular, be convinced that the Management Team has the appropriate skills to operate and manage the enterprise.
Management will be required to submit and commit to Key Operating Milestones (KOMs) which will be published on a regular basis so that any existing and prospective investor can make an informed call on the continued progress of existing shares or current information on the investment in new shares. The listing rules require these KOM’s to be presented at regular intervals, but to be no later than every three months. With due regards to the nature of the RealStew business we believe there are three prime KOM’s that we will present to the market, namely:
The number of RealChat mobile downloads (Android, iOS and Windows)
Eye ball traffic on the platform in terms of numbers of messages sent and received, postings made, or material shared and forwarded that would attract the attention of Members to the platform and present RealStew with an opportunity to leverage a product offering; Gross revenue invoiced by RealStew;
A sector breakdown of this data will be expanded in due course based on which interaction, engagement and sharing is associated with business, social and private Members. We will also give a breakdown on the number of subscribers to the different Applications and which Applications are 100% owned by RealStew and which Applications developed and owned by Third Party Developers where RealStew clips the ticket. As we are a cloud based enterprise, we have real time access to the above data. This presents us with an opportunity to publish the KOM’s in real time 24 /7 with a breakdown of these metrics on a 24 hour, 7 day and 30 day cycle. REALSTEW DIVIDEND POLICY RealStew has a dividend policy to distribute to shareholders 25% of after tax profits and pay dividends 4 times a year. RealStew has a business model that will allow the company to generate profits and be cash generative, allowing it to reward shareholders with dividend on their investment.
OUR DISCLOSURE DOCUMENT RELEASED AT THE TIME OF THE NXT LISTING We have no intention of raising capital on the NZX listing and therefore are only required to release a disclosure document. The disclosure document will be an opportunity to present to the existing shareholders, prospective shareholders (and their financial advisers) detailed information on:
The uniqueness, and appropriateness, of our business model; The depth, experience and strength of our management team;
The leverage value, from a management and execution perspective, of our collaborative model; The proprietary features of our IP;
STRATEGY The disclosure document will declare the intention to secure a 1 billion base of active Members and eye ball traffic of 100 billion daily interactions on the platforms by December 2018. Our strategy as to how we intend to reach these long term milestones will be articulated in the disclosure document along with stepping stones on the journey. THE IMPORTANCE OF ESTABLISHING VALUE FOR THE SHARES WHEN TRADED ON THE NXZ BOURSE The value of any share is what a willing buyer is prepared to pay a willing seller. The listing on the NZX first will not involve the raising of capital but that is not the case when we seek an AIM listing. It is our intention to raise GBP15 to GBP25 million on the AIM listing. Capital will be raised by the company issuing more shares with the quantity of shares to be issued dependent on the price at which capital funders are prepared to subscribe to the offer. The issue price for the capital will depend on, inter alia:
The price at which the shares are trading on the NZX stock exchange;
The volume of shares traded on the NZX market – determines the depth of the demand for the shares. Where the volume us low less weight is placed on the price of the share as a true indicator of market value;
The demand for the new shares to be issued from institutional and private investor shareholders who see the medium to long term value of the company and the potential for growth;
RealStew Management, after the NZX listing will need to strike a fine balance between devoting time to executing the strategy to globally expand the enterprise and meeting the KOM’s and spending time on a ‘road show’ presenting the company and its prospects to existing and prospective investors. Closer to the AI listing date the number of presentations on the road show will increase dramatically with institutions and private investors groups courted in New Zealand, the UK and the USA. ‘BOOK BUILD’ AND ‘NIL PAID LETTERS OF ALLOCATION’ WHEN WE DO THE AIM LISTING The day before the AIM listing, a ‘book build’ is done of the offers / expressions of interest to buy shares in the float and a strike price agreed on by those subscribers who will take up shares. It is correct policy, when we have a company already listed to offer existing shareholders an opportunity to participate in any new float as well. It is our intention, as part of the listing on AIM, to broaden the base of shareholders. Accordingly, from the new float to be issued, we will limit the number of shares that will be reserved for existing shareholders and those reserved for new shareholders. We will allocate and reserve 20% of the new shares to be issued for existing shareholders and the balance placed with new shareholders in the ‘book build’. The process followed will go something like this:
Assume RealStew Limited has at the time of the second listing on the AIM board, 900 million shares on issue and the shares opened on the initial day of listing at $NZ0-50 each (giving the company a value of NZ$450 million) and with the metrics being met the price rises to NZ$1-00 (value company ay NZ$900 million);
We also assume the share volume of trade is reasonable to indicate that the price of NZ$1-00 is a good indicator of value from a volume perspective;
We will have developed a successful road show and have built up demand for the new offer of shares before deciding to raise GBP25 million. (NZ$50 million based on GBP0-50 = NZ$1-00);
We decide to place the new shares at a 20% discount to the current market value of the shares so as to motivate / encourage take up and trade. Namely NZ$0-80 each;
To raise GBP25 million (NZ$50 million) we need to issue a further 62 500 000 shares at NZ$0-80 each;
20% of these new shares, namely 12 500 000 will be reserved for existing shareholders and the balance for new institutional shareholders.
Reserving 12 500 000 new shares to be allocated among holders of 900 million existing shares, means we have a challenge in that we are not able legally to issue fractional shares and from a secretarial / administrative perspective not less than 500 shares. With 12 500 000 shares and a minimum of 500 shares to be issued then it follows, that only those shareholders with 69 250 or more shares in RealStew will have the right to participate in the rights issue which will be proportional to their shareholding thereafter. For administrative purposes we will treat the threshold to be 75 000 RealStew shasres to participate in the ‘nil paid letters of allocation’ Assume you are an existing shareholder and have say 75 000 shares. You will receive from RealStew a ‘Nil paid letter of allocation’, inviting subscription to an issue of a further 75 000 / 69 250 x 500 = 540 shares in the float at NZ$0-80 per share. Where it gets interesting is that as rights holders you can ‘trade’ these rights without paying for the shares where the existing price is say NZ$1-00. Anyone wanting to buy shares in RealStew at NZ$1-00 each can purchase the ‘Nil paid letters of allocation’ at $1-00 each with NZ$0-20 per share going to the holder and NZ$0-80 going to RealStew as the share placement price. The ‘Nil paid letters of allocation’ are therefore valuable to any holder. It could be that the road show is super successful and the demand for shares from institutions is so great that the offer to purchase shares in the float is oversubscribed. Often, institutions will enter the market just before the float and buy as many shares as they can so the difference between the market price for the shares and the ‘Nil paid letter of allocation’ widens to say a market price of NZ$1-60 (or even more) and a Nil paid price of NZ$0-80, allowing rights holders to pick up a healthy profit without paying a cent. The ball is entirely in our court to achieve our KOM’s and demonstrate to the market that we have what it takes to become the dominant global communication platform. By achieving the stated KOM’s, we will garner, as each month goes by, more institutional support and the ‘road show’ leading up to and after the AIM listing, where we achieve and exceed KOM’s, will attract a multiple in the subscription for shares issued for the AIM listing.
Nil paid letter holders will benefit substantially – the bottom line is to invest in RealStew shares now and benefit from the ability to trade in ‘nil paid letters’ without any outlay at the time of the AIM float. Once we have determined a ‘strike’ price for the issue the shares are issued and dual listing on AIM and NZX will commence. We will then move the primary listing to AIM (London) and the shares in London will be quoted in GBP and on the NZX in NZ$.
The threshold to participate will therefore be 75 000 RealStew shares and then multiple of 75 000 thereafter. Anyone who is therefore a current RealStew shareholder / RealCoin Warrant holder please note if you are close to these thresholds you may use this opportunity to subscribe for additional RealCoin warrants now before we close at the end of March 2015 TIMING OF THE NEW ZEALAND LISTING By the end of March 2015, we are required to complete all the secretarial work, RealCoin redemption and legal work. Also we must complete the transfer of the business /IP to the UK registered entity and get all the shares, in the UK registered company, issued to shareholders. st
We will commence trading, as a UK based business, from midnight GMT on the 31 March 2015 and start recording / reflecting the KOM’s. We propose trading for at least a month so as to get some history on the KOM’s tables and refine projections for the disclosure document which we expect to be ‘ready’, subject to final tweaking, by the end of April 2015. THE KOM’s WE WOULD LIKE TO HAVE IN PLACE We have an existing User base that actively interacts on the platform and we have for a few months now been tracking the eye ball traffic and revenue numbers on the platform. With the addition of RealChat for mobile in early December and the upgrade on the 19
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January together with the planned upgrades on the 9 Feb and every three weeks thereafter, we will, by the end of March see a material increase in the traffic and revenue numbers we will also, as a KOM, start tracking the number of RealChat mobile downloads.
In recent months, we have committed resources to priming three business groups in London, with sponsored syndicates, to launch RealChat and should everything go to plan we envisage at least 40 000 downloads of RealChat and subscriptions to as many RealChat, as well as upgrades to the application with revenues just less than GBP80 000. By the end of April we believe we will be able to present to the market the following KOM’s:
A total of 40 000 Mobile uploads (across all platforms) and, an average of at least 200 new uploads a day – translating to a compounding growth of a 15% month on month increase in Mobile RealChat Users;
Eye ball traffic based on at least 400 000 per 24 hour cycle and a week on week increase of 10% compounded growth in these numbers;
Daily revenue tracking at GBP1500-00 and increasing week on week at 10% per week with projected analysed revenues of GBP 6 million.
ANALYSIS DOES NOT BREED PARALYSIS – AN OPPORTUNITY TO LEVERAGE DATA SHARING From the KOM’s page we will add a link to a FREE application that any budding business analyst or statistician can access which would allow them to interrogate the disclosed data, set up graphs, plot trends, make assumptions and analyse the impact of these assumptions. Accessing the application will automatically subscribe the Member to a blog and a Many to Many User Group. Members of the User Group will be asked to debate the analysed numbers and then share their comments on social media platforms with the more topical points covered by informative blog postings. Active Members of the Group, due to their penchant for financial services, will be directed to a broader range of financially focused subscription based Applications directly linked to Peer 2 Peer Lending, Crowd Funding, Foreign Exchange and Passive income trading.
ESTABLISHING LIQUIDTY FOR THE SHARES – ON THE NZX MARKET Listing on the NZX, where we are not raising capital, creates certain challenges with regards to establishing market liquidity for the trading of the shares. The listing will open with control of the company vesting with the Trust (50.1%) and the rest of the shares tightly helped by founders and some 1500 loyal RealStew supporters. An active ‘road show’ coupled to a ‘good story’ to tell, expounding the qualities and potential of RealStew already with established Members in 90% of the World’s countries will create a scenario that we will garner support for the shares. However, we must be aware of the danger in creating an unsustainable bubble in the value of the company in the short term which could prove to be unsustainable. We will resolve the liquidity issue by including, as an irrevocable condition of the listing, that any shareholder, as at the date of the NZX listing, who has 250 000 shares or more will be obliged to sell at 5% of their shares into the market. The Trust, which is the controlling shareholder, will be excluded from this obligation. With 900 million shares on issue and 50.1% controlled by the Trust and the balance shared by 1500 plus shareholders, we believe that the 5% obligation will relate to some 300 million shares, or provide 15 million of the shares into a free float. The NZX listing Sponsoring Broker will have the irrevocable mandate to place the 15 million shares into the market. We would propose that this be done as follows:
From the date of listing a period of 100 share trading days from this date the Broker shall sell into the market on 4 different occasions on each day blocks of shares into the market;
Based on the number of shares held by the broker being 30 million, and with 100 trading days and 4 trading periods per day, the broker will offer for sale (at the best possible price) 37 500 shares per period or 150 000 shares per day.
The Broker represents all shareholders equally and the shares of each client sold pro rata to the number they have for sale.
TRADING PRICE FOR THE SHARES WHEN THEY FIRST OPEN ON THE NZX The NZX listing process will include a ‘road show’ to the investor community in NZ and the UK. The disclosure document will cover the main points but a particular emphasis will be made of the following unique aspects of the RealStew business:
Easy traction, limited friction and universal acceptance of our offering gives us a global presence without having to open offices in every country where our Members are located;
The integrated nature of the RealStew platform that brings together communication, knowledge aggregation and financial services;
Pull marketing as opposed to push with RealStew positioned to capitalize on Mobile marketing;
RealStew is on track to become the World’s largest Cloud based Book Keeping and Accounting Service Provider;
RealChat Mobile – an instant messaging system with a clear business model that monetizes each and every interaction, engagement and instant message on the Platform;
RealFinancial, an online financial gateway with the seamless integration of a full range of financial products and services to a market not restricted to the ‘banked’ market;
A support and sales network that strips fixed overheads out of the operation and presents a SaaS model that is profitable for each new application added to the library;
Knowledge aggregation and storage, positioning RealStew to become a market leader in cloud based storages services;
RealStew, as a collaborative model, is positioned to socially secure a loyal following who will choose to use the RealStew Platform as their focal point for communicating and socializing with their contacts;
Focusing on the KOM’s and in particular the monetization of the eye ball traffic and the real time tracking of subscription revenues means that we can present to the Market, trading figures which will demonstrate that RealStew is cash generative, while debunking the suggestion that growth in the platform requires large capital calls to fund trading losses, rather than using a capital call to fund stepped growth;
We will, in the course of the ‘road show’ be asked to put forward and indicated opening price for the shares, that we believe is reasonable and a bench market to start the ball rolling. We believe it would not be unreasonable to suggest that RealStew should start with a Market Capital value of NZ$500 million with the shares opening at between NZ$0-50 to NZ$0-60 each. We would support an argument for this opening value with the following facts: The opening Market Value of NZ$500 million for the enterprise is 25% of Xero’s market cap with the difference being that before the end of 2015 RealStew will have a substantially higher number of Cloud Based Online Financial Accounting clients than Xero and will catch up and overtake it. Intuit (https://www.intuit.com) , the world’s largest service provider, in terms of numbers of paid subscribers and has a market capital value of US25 billion.
WhatsApp was purchased by Facebook for NZ$22 billion with revenues less than US$20 million and a business model unable to monetize easily the billions of instant messages processed through the Platform each day.
With an opening Market Capital value of NZ$500 million we will move the value up to NZ$1 billion (NZ$0-50 to NZ$1-00 value per share) by the time it comes to address the placement of shares in the AIM listing. CAPITAL RAISED AT THE AIM LISTING RealStew will place new shares on the AIM listing to secure between GBP15 – 25 million. A final decision as to the amount to be raised will be made during the ‘book build’ where the company will be in a better position to determine the demand for the shares. The funds will be deployed to substantially scale up the growth of the platform. LIFE AFTER LISTING The listing of the shares on both the NZX and AIM boards is an important part of the RealStew journey. The listing will materially position RealStew on the global stage and it is up to us as founders, shareholders, stakeholders and Users of the Platform to focus on the next goal and that is 1 billion active Members by December 2018. THE FOUNDATION CLUB USER GROUP MEMBERSHIP AFTER THE LISTING The Foundation Club User Group has from inception been a User Group where subscription to the Group included the Member becoming a RealStew Shareholder and part of the policy team. From the time we list on the NZX it will not be legally possible to allot further shares and all trading with shares will be executed and managed on the exchange. In keeping with the ethos of the User Group being the domain of all Users who have a financial commitment to RealStew we propose to extend the Membership to include all RealStew shareholders as recorded in the company share register PLUS all Members who have agreed to participate in the Charity Sharing Application. Members must agree to instruct RealStew to round down each Currency on the Passive Income Flow tables at the end of each calendar month and then donate the rounded down funds to one or more registered Charities. We believe this will materially increase the Foundation Group User Numbers with the Group playing an increasingly important part in leveraging the growth of RealStew to reach the target base of 1 Billion Active Members by December 2018. We see the day when there will be 100 000 active Foundation Club Members and representatives of each and every Country and all Time Zones. The User Group will ‘never sleep’ with each group of members holding and transferring the baton 24/7. A living ‘machines’ that drives and leverages our success.
SUCCESS LEVERAGE SUCCESS The 5 years and capital many of us have committed to building RealStew to the point where we will enjoy public recognition and the media attention and real tangible wealth which over 1500 shareholders are about to experience will materially change the dynamics of the game. We will leverage our success to drive RealStew to a super successful AIM listing and we will all see a daily, weekly and monthly increase in the numbers. JOIN THE FOUNDATION CLUB AND TAKE UP THE CHALLENGE We have the draw for 20 000 RealStew shares at the end of January for all newbies and their sponsors to the Foundation Club. FINAL DATE TO SUBSCRIBE FOR REALCOIN WARRANTS AND REDEMPTION OF WARRANTS FOR REALSTEW SHARES Additional capital is required to cover the cost of listing RealStew on the NZX as well as corporate, secretarial and legal work involved in restructuring the group. st
The final date to subscribe for RealCoin Warrants is on or before the 31 March 2015. THE INDIAN CONNECTION India, from the perspective of boosting our technical capacity and as growth market, will play a very important part in our 2015 success. We are continuing our discussions on a number of levels and different parties and we look to include the results of these negotiations in the disclosure document at the time of the NZX listing. GENERAL COMMENT RealStew committed to its current journey almost 6 years ago and through this time we have overcome many challengers, made more good decisions than bad ones and the bad ones never crippled us. We embrace the opportunities in the problems and do not allow the problems in the opportunity to hold us back.
ONWARDS AND UPWARDS