Clarocity Corp CLRYF

RE:Lawsuit

[Trelawny]

HI Cabbie,
here is what I wrote a few weeks ago. I added to additional points to the lawsuit area. D and E - I just added now.

Here is the post: 

Hello Everyone,
I thought I would give a bit of my perspective on the state of things at Zaio.

To start, I am amazed that the share price hasn’t moved. If I weren’t in blackout I would be buying with both hands.

And to answer “why am I, management and the board in blackout”? Because the financials are to be released in a few weeks and that puts us in blackout.

So what has happened since January?

1)      There was a financing done which was shareholder friendly.
          a.       This was facility was left open in order to provide an ongoing financing avenue for the company.
2)      A new board was put in place.
3)      The full facility was financed and closed a few weeks ago.
4)      The company has landed new contracts with large GSEs
5)      They received an excellent review from one of their key clients (03/30/16 Press Release)
          a.       This is critical in showing that the technology is good and well received by clients.
6)      The company announced and closed a pivotal acquisition in 45 days.
           a.       This proves that the company can execute
           b.      This eliminates the ghosts of the past that the company cannot close a deal in a timely manner
          c.       They paid a fair price – which is good for the acquired company and shareholders
          d.      You can also assume that the new company has revenues. It would not be in business for many years without revenues.
7)      This new acquisition creates a channel for sales of the newest product MVPro
           a.       This is a much-desired offering that is filling a large need in the market place.

A quick note on the lawsuit – and the acquisition:

1)      First - There are no damages to be claimed. The full rights of all debenture holders have been preserved.
           a.       This means that they have no damages to claim.
2)      If the case goes to court the worst outcome would be that they annul the results of the vote and the Convertible Debentures stay in place.
3)      There are then many possible courses of action that the company can take. Here are three:
          a.       Do an Issuer Bid – They could put forward the exact same offer to the debenture holders that was voted on to change the Indenture. This would not change the indenture so it would be done on an individual basis. I would expect that about 60% of the holders would take this (possibly more).
         b.      Call the Debentures
         c.      Do both – Do A then B.
           d.       Do A only and wait to pay out at Maturity next June
           e.       Do nothing and wait for maturity and pay it all out then.


I personally would be happy to back a call of the debentures. Why not? The company is light years ahead of where it was and the company is growing and acquiring. Management is executing and we have a great new addition with the acquisition of Valued Veterans.

I would also add the management and advisors of www.valvets.com are very solid.
Andy has a fantastic bio with an MBA and Military experience and so too does Russell Bruemmer having been the General Counsel of the CIA and FBI. They will both be great assets for the combined companies.

You can see their bios here:
https://www.valvets.com/about-us/

Also, ask yourself this question: Do you think Valued Veterans would enter into an arrangement if they felt there were any significant issues with Zaio?

A quick note on the acquisition:
(remember this was posted prior to the news of the INC. 5000 news). Revenue from 2015 can be found on the INC website of $4.2M USD)

This is the deal that effectively replaces the Axis deal – but the size of Valued Veterans is a much better fit. The goal is to grow the new technology enabled business – not buy a huge business of traditional appraisal work.

This gives Zaio the national licensure, and an excellent team, upon which to build out the newer technology offerings which require the licensure.

In summary:

So, there has been some doubt and consternation about the company and the stock price. Markets can be very inefficient from time to time – this is one of those times.

This company is now primed for growth and management is executing as they have promised.

This acquisition is key to giving them the national platform to immediately drive new revenues and accelerate growth.

I believe the majority of the big issues are behind us. Going forward, we now have the platform that was targeted but not closed before with a company that is a much better fit. And we have an excellent management group and board of directors driving results.

If I could – I would be buying with both hands.

I believe that this is a really, really good entry point.

Best regards,
 

Colin Fisher