The FOBI AI (“
FOBI”) press release Friday, June 28
th (see WebLink below) probably has many readers scratching their heads. The “Shares-For-Debt” transaction doesn’t need explanation to most readers. It leaves FOBI without the debt and the Creditor received almost 3 million FOBI shares. The Creditor, one would assume, believes that he/she/they have traded for a RISK/REWARD opportunity that the Creditor likes, and with this assumption, will forgo payment of $209,750 Cdn, not unlike the buying of stocks on the open market. You provide your cash to a broker, and you buy shares of a company where you determine that the RISK/REWARD is worth it to the individual.
The WebLink below is the FOBI press release:
https://investors.fobi.ai/pr/fobi-announces-shares-for-debt-arrangement-and-strategic-private-placement The second part of the above FOBI press release is where the head scratching begins. The purpose of this post is to provide the interested reader to some background information/definitions that are related to Private Placements. It does not explain the “
Who and Why” of the transaction, but it will provide some readers with the background to try and figure out the “Who and Why”. I am personally still working on the potential “Who and Why”.
The "Who and WHY" question is the Buyer(s) of Private Placement. Statements within the FOBI press release: - It’s a Non-Brokered Private Placement
- Up to 15,000,000 Units of FOBI
- The Price per Unit is $0.10 US Dollars
- The potential gross yield to FOBI is $1,500,000 US Dollars (current exchange rate 1.3687 Cdn as of Friday, June 28, 2024)
- FOBI “Units” are defined as one (1) FOBI share @$0.10 USD and one (1) Share Purchase Warrant, exercisable to acquire one (1) additional FOBI share at an exercise price of $0.20 USD. The Share Purchase Warrant is exercisable at any time for a period of thirty-six (36) months from the date of issuance of the Share Purchase Warrant.
- The Units are subject to compliance with applicable regulatory requirements and in accordance with National Instrument 45-106, Prospectus Exemptions (“NI-45-106”)
- The Units will be offered to purchasers that are resident in Canada (other than Quebec), the United States and/or other qualifying jurisdictions.
- The closing of the Offering is expected to occur on or about July 3, 2024, or such other date or dates as FOBI may determine and are subject to certain conditions, including but not limited to, the receipt of all necessary approvals, including approval from the TSXV.
- The securities of FOBI have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws and may not be offered or sold in the United State absent registration or an available exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws.
I have provided WebLinks below that provide explanation of
Private Placements. The Private Placement explanation/definition references:
SEC Regulation D,
“National Instrument 45-106",
Prospective Exemptions,
“Accredited Investors”.
https://www.investopedia.com/terms/p/privateplacement.asp The Private Placement is interesting on many levels: - Priced in US dollars
- Priced almost 100% above current US prices for FOBIF shares (currently trading at $0.0507 US)
- Expected closing date on/before/after July 3, 2024
- My reasonable assumption that this is a “done deal” and it will close within a reasonable time frame. Otherwise, why issue a Press Release?
- What is the “Who and Why” of the Private placement? The “Who and Why” become very interesting when we know Who Is/Are The Recipients of the Private Placement. I do not provide an answer to the Who and Why in this post.
WebLink for the SEC: Regulation D https://www.investopedia.com/terms/r/regulationd.asp WebLink for Accredited Investor: Duties and Requirements It is interesting to read the “Requirements for Accredited Investors” for Private Placements within the WebLink below.
An Accredited Investor can be a private person (or couple), general partners, executive officers or directors, private business development company or organization, registered brokers and investment advisors, individuals who have certain professional certifications, designations, or credentials; individuals who are “knowledgeable employees” of a private fund, and SEC/State-Registered Investment Advisors
https://www.investopedia.com/terms/a/accreditedinvestor.asp WebLink for NI-45-106 Prospectus Exemptions https://www.bcsc.bc.ca/securities-law/law-and-policy/instruments-and-policies/4-distribution-requirements/current/45-106/45106-ni-september-13-2023 DO YOUR OWN DUE DILIGENCE
Cheers and stay informed, jdfm22