Julius Csurgo Creative Capital Ventures


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Julius Csurgo Creative Capital Ventures

  2. 2. To seek out private companies in NorthAmerica, South America, Africa andEurope and bring them public in the USmarketplace primarily via ReverseMerger and simultaneously making acapital investment in the company.INVESTMENTSTRATEGYNext: Investment Strategy, Page 2
  3. 3. Raising capital for small and medium size enterprises (SME’s) in the currentglobal economic climate is challenging. Sophisticated corporate investors ingeneral and established investment institutions in particular, are insisting onhybrid structures (debt/equity) as a way to protect their investment capital,when the funding is private. Exceptions to this dynamic exist when thecompany being funded receives investor “bridge” equity with “piggy back”investor registration rights prior to filing for full listing status.However, to go theroute of being a public company can be difficult for SME’s, especially if youtake the traditional approach of an IPO (Initial Public Offering).Next: Why Go Public?
  4. 4. THE ADVANTAGESWHY GO PUBLICNext: Disadvantages of IPO•  Access  to  Capital  –  It  is  easier  to  raise  money  as  a  public  company  than  a  private  company.  Investors  are  more  comfortable  because  there  is  sufficient  informa8on  available  in  public  filings,  the  exit  is  faster,  and  the  valua8on  is  likely  higher.  •  Liquidity  –  Owners  are  prior  investors  have  a  way  to  cash  out  over  8me.    •  Growth  through  acquisi7ons  or  strategic  partnerships  –  A  public  company  can  use  its  stock  as  currency  for  acquisi8ons,  preserving  needed  cash  for  other  uses.    •  Stock  Op7ons  to  incen7vize  –  Through  ves8ng  of  op8ons,  a  longer-­‐term  commitment  is  encouraged  from  senior  management  and  others.  
  5. 5. DISADVANTAGES OF IPOWHY GO PUBLIC•  IPOs  cost  are  very  high;  •  An  IPO  from  start  to  finish  can  easily  take  a  year  or  more;  •  The  IPO  “window”  is  generally  considered  to  be  either  open  or  closed,  and  is  generally  only  available  to  companies  with  market  value  in  excess  of  roughly  $300  million;  •  In  an  IPO,  an  underwriter  can  cancel  a  deal  or  drama8cally  lower  an  offering  price  at  the  last  minute  because  of  market  condi8ons;  •  An  underwriter  oMen  may  suggest  or  even  insist  that  the  company  raise  more  money  in  the  offering  than  the  company  reasonably  needs,  crea8ng  greater  dilu8on  to  owners.  
  6. 6. THE ACCEPTED ALTERNATIVE TO AN IPO IS GOING PUBLIC VIA AREVERSE TAKEOVER (RTO) ALSO CALLED REVERSE MERGER.In  a  merger,  reverse  or  otherwise,  two  corpora8ons  join  together.  One  becomes  the  “surviving  corpora8on”;  the  other  becomes  the  “non-­‐surviving  corpora8on.”    The  surviving  corpora8on  swallows  up  the  assets  and  liabili8es  of  the  non-­‐surviving  corpora8on  and  the  laOer  simply  ceases  to  exist,  or  may  survive  as  a  wholly-­‐owned  subsidiary  of  the  new  parent  company.  Next: Structure
  9. 9. •  Some reverse mergers are structured as an exchange of shares or simple assetacquisitions. The transaction generally ends up as a tax-free reorganization underIRS regulations, and whether the deal is a merger, share exchange, or assetacquisition, the net result tax wise is typically the same. In general, the tax treatmentof reverse mergers is very straightforward and in almost all cases, the parties avoidthe payment of a tax as a result of the transaction;•  After the reverse merger closes, the company is now a fully reporting public companywith the company’s shares traded on the OTC:QB. If the company meets the listingrequirements of NASDAQ or another recognized exchange, it can apply to have itsshare capital traded on that market platform. The company will file quarterly andannual financial reports to keep the public aware of its business activities.Next: Well Known Public Companies
  10. 10. THE FOLLOWING WELL KNOWN COMPANIES HAVEGONE PUBLIC THROUGH REVERSE MERGERS:Texas  Instruments  Inc.  Jamba  Juice,  Inc.    Berkshire  Hathaway,  Inc.    Tandy  Corpora8on  (Radio  Shack  Corpora8on)    Occidental  Petroleum  Corpora8on    Muriel  Siebert  &  Co.,  Inc.    Blockbuster  Entertainment  The  New  York  Stock  Exchange  Next: Advantages of Reverse Mergers
  11. 11. ADVANTAGES OF REVERSE MERGERNext: Financing the Company•  Lower  cost  than  IPO.  A  reverse  merger  usually  costs  significantly  less  than  an  IPO.  Most  reverse  mergers  can  be  completed  for  under  $500,000,  some  have  been  done  for  around  $200,000;  •  Speedier  process  than  IPO.  Reverse  mergers  can  close  in  30  days  or  sooner  whereas  an  IPO  can  take  a  year  or  longer;  •  Not  dependent  on  IPO  market  for  success;  •  Not  suscep8ble  to  changes  from  underwriters  regarding  ini8al  stock  price;  •  Less  8me-­‐consuming  for  Company  Execu8ves;  •  Less  Dilu8on;  •  Underwriter  unnecessary;  
  12. 12. FINANCING THE COMPANYNext: Methods to Finance the Company After It Is PublicMost  reverse  mergers  are  undertaken  in  order  to  obtain  financing  for  a  growing  company.  Companies  effec8ng  reverse  mergers  usually  can  raise  somewhere  in  the  range  of  $3  Million  to  $50  Million,  although  in  the  case  of  the  Crea8ve  Capital  Ventures  Ltd.  financing  model  we  envisage  a  capital  raise  ceiling  of  $3  Million  for  each  project.  
  13. 13. METHODS TO FINANCE THECOMPANY AFTER IT IS PUBLICNext: Common Stock Pipes•  Common  Stock  PIPEs  (Private  Investment  in  Public  Equity);  •  Conver8ble  Preferred  Stock  and  Conver8ble  Debt  (Structured  PIPE  deals).  Next: Common Stock Pipes
  14. 14. (Private Investment in Public Equity)COMMON STOCK PIPES•  This  is  the  private  placement  of  registered  or  unregistered  shares  of  the  company’s  common  stock  to  investors.  These  shares  are  generally  placed  at  a  discount  to  the  prevailing  bid  price  of  the  company’s  stock;  •  If  the  placement  is  of  unregistered  shares,  the  company  will  immediately  file  a  registra8on  statement  to  register  the  shares  so  that  they  are  free  trading  and  the  investor  can  liquidate  his  posi8on.  Next: Convertible Preferred Stock and Convertible Debt
  15. 15. CONVERTIBLE PREFERRED STOCK ANDCONVERTIBLE DEBTStructured  PIPE  deals  represent  about  43%  of  all  PIPE  deals.  Most  investors  choose  to  go  the  route  of  Conver8ble  Preferred  or  Debt  deals  for  several  reasons.  Some  of  the  most  significant  reasons  are  as  follows:    •  144  holding  period  commences  when  you  take  ownership  of  the  conver8ble  instrument,  not  when  you  convert  shares  into  common  stock;  •  This  is  important  for  transac8ons  where  no  registra8on  statement  is  being  filed  and  the  investor  is  just  wai8ng  for  the  6  month  holding  period  to  expire;  (Structured PIPE deals)
  16. 16. •  During  this  period  the  investor  may  be  earning  interest  on  his  investment;    •  144  holding  period  commences  when  you  take  ownership  of  the  conver8ble  instrument,  not  when  you  convert  shares  into  common  stock;  •  This  is  important  for  transac8ons  where  no  registra8on  statement  is  being  filed  and  the  investor  is  just  wai8ng  for  the  6  month  holding  period  to  expire;    •  During  this  period  the  investor  may  be  earning  interest  on  his  investment;  •  In  cases  where  the  144  holding  period  is  coun8ng  down,  or  an  effec8ve  registra8on  statement  is  outstanding,  the  investor  can  “Structure”  his  conversion  terms;  
  17. 17. •  In  most  cases  the  Conver8ble  Preferred  or  Debt  instrument  will  probably  have  a  floa8ng  conversion  level,  subject  to  not  conver8ng  to  more  than  20%  of  the  company’s  equity  in  each  converted  transac8on  (FINRA  rules  require  shareholder  approval  for  any  one-­‐8me  issuance  of  common  stock  exceeding  20%  •  In  this  case,  the  investment  is  protected  because  the  investor  will  only  convert  when  it  is  in  his  favor;  Next: Equity Line of Credit is the 3rd Method of Raising Capital
  18. 18. EQUITY LINE OF CREDIT IS THE 3RD METHODOF RAISING CAPITAL•  As  far  as  the  Company  is  concerned,  this  is  the  most  flexible  method  of  raising  capital  because  the  company  will  draw  down  capital  when  and  if  needed  from  the  investor  who  provides  the  equity  line;  •  There  are  limita8ons  on  all  equity  lines  based  on  the  company’s  stock  Volume  Weighted  Average  Price  (VWAP).  Generally,  a  company  can  pull  down  20%  of  the  average  weekly  dollar  trading  volume  and  it  is  done  so  at  a  discount  to  the  prevailing  bid  price;  
  19. 19. Next: Developing Aftermarket Support And Liquidity•  In  all  cases,  an  Equity  line  is  only  drawn  upon  when  a  registra8on  statement  has  registered  the  underlying  stock  in  the  equity  line  (some  Hybrids  allow  for  draw  downs  while  the  shares  are  not  yet  registered).    
  20. 20. DEVELOPING AFTERMARKET SUPPORT ANDLIQUIDITY•  AOen8on  to  the  role  of  Investor  Rela8ons  (IR)  in  promo8ng  and  suppor8ng  visibility  and  liquidity  is  part  of  an  integrated  approach  to  these  financing  alterna8ves;  •  Without  stock  promo8on,  these  financing  op8ons  are  dead  in  the  water.    Next: Ways To Kick off a Successful IR
  21. 21. THERE ARE SEVERAL WAYS TO KICK OFFA SUCCESSFUL IR•  Promo7onal  IR  –  Classic  promo8onal  techniques  include  arranging  “dog  and  pony  shows”  to  meet  with  large  groups  of  retail  brokers,  to  induce  them  and  their  customers  to  share  the  dream  of  the  company’s  future  success;  •  Issuing  frequent  powerful  press  releases,  convincing  friendly  reporters  to  pen  CEO  profiles,  holding  press  conferences,  and  commissioning  “strong  buy”  research  reports;  •  Ins7tu7onal  IR  –  Catering  to  “Sell  Side”  analysts;  
  22. 22. •  WEB  IR  Strategies  –  Since  most  investors  trade  and  research  on-­‐  line,  it  is  important  to  reach  them  on-­‐line.  Companies  need  the  use  of  blogs,  social  networking,  and  targeted  Web-­‐based  push  marke8ng  –  to  connect  with  the  natural  buyers  of  their  shares;  •  Influen7al  financial  Web  Sites  and  electronic  investor  newsleOers  can  have  an  impact  that  is  more  drama8c  than  tradi8onal  sell-­‐side  analyst  reports.      Next: Creative Capital Ventures Strategy
  23. 23. STRATEGY EMPLOYED BYCREATIVE CAPITAL VENTURES LTDThe  professionals  at  Crea8ve  Capital  Ventures  Ltd.  have  many  years  of  experience  in  the  Interna8onal  Investment  Banking  community  in  the  area  of  deal  development,  deal  structure,  and  execu8on.  U8lizing  this  experience  they  will  take  the  first  step  toward  loca8ng  viable  private  companies  (“Target  Company”)  that  can  demonstrate  long  term  growth  poten8al  and  promise.    
  24. 24. Once  a  target  company  is  located  and  veOed  (thorough  due  diligence),  then  Crea8ve  Capital  Ventures  Ltd.  will  locate  a  viable  U.S.  or  Interna8onal  listed  Public  Company,  or  file  an  S1  registra8on  statement  from  scratch.  Parameters  for  selec8ng  a  viable  Target  Company:  •  Strong  Management;  •  Developed  Product  or  Product  line;  •  No  Pure  Start-­‐ups;  •  Marke8ng  Plan  in  place;  •  Genera8ng  some  level  of  Revenue;  •  Growth  Stage  of  Industry  and  future  trends;  •  Limited  Debt  on  company  books  –  we  do  not  raise  capital  to  pay  off  debt.  
  25. 25. •  Crea8ve  Capital  Ventures  Ltd.  will  provide  the  Target  Company  with  the  capital  required  to  purchase  the  restricted  stock  of  the  public  shell  (US$350,000-­‐$500,000)  and  the  funds  required  to  complete  legal  and  accoun8ng  (approximately  $60,000  -­‐  $80,000),  or  the  funds  required  to  file  an  S1  registra8on  statement  (approximately  $40,000  -­‐  $50,000).  These  funds  will  be  loaned  to  the  Target  Company.  Crea8ve  Capital  Ventures  Ltd.  will  also  buy  as  much  of  the  free  trading  stock  that  is  available  in  the  Public  Company  for  its  own  account;  •  AMer  the  comple8on  of  this  Reverse  Merger  the  shareholders  of  the  Target  Company  will  own  approximately  85%  -­‐90%  of  the  Public  Company  which  is  now  the  Opera8ng  Company  (“OPCO”)  and  Crea8ve  Capital  Ventures  Ltd.  will  own  about  8%-­‐9%  of  the  public  company  in  free  trading  shares.    
  26. 26. CREATIVE CAPITALVENTURES LTD.Own 8% - 9%Shares outstanding in Freetrading stockLEGACYSHAREHOLDERSOwn 1% - 2%Shares outstanding in Freetrading stockOPCOSHAREHOLDERSOwn 85% - 90%Shares outstanding inRestricted SharesSHELL COMPANY
  27. 27. •  Once  the  Public  Company  becomes  the  Opera8ng  Company  (“OPCO”)  Crea7ve  Capital  Ventures  Ltd.  will  finance  the  OPCO  either  through  a  Structured  PIPE  deal  or  Equity  Line  of  Credit.  Simultaneously,  the  funds  loaned  to  the  OPCO  to  complete  the  Reverse  Merger  will  be  converted  into  a  Structured  PIPE  as  well;  •  Crea7ve  Capital  Ventures  Ltd.  will  experience  immediate  liquidity  with  the  free  trading  shares  of  OPCO  it  owns  from  the  effort  employed  by  the  IR/Promo  group  we  hired  at  the  close  of  the  Reverse  Merger  (Stock  promo8on  effort  usually  commences  1-­‐2  months  aMer  close  of  RTO).  It  is  probable  that  at  this  point  in  the  investment  we  will  have  recovered  our  original  loan  and  possibly  a  mul8ple  of  that  loan.    
  28. 28. •  Shares  underlying  the  Structured  PIPE  and/or  the  Equity  Line  will  be  sold  upon  effec8veness  of  Registra8on  statement  or  144  8me  period  lapses  (6  months).  The  conversion  level  of  the  Structured  PIPE  deal  is  floa8ng  so  Crea7ve  Capital  Ventures  Ltd.’  investment  is  always  protected;  •  Crea7ve  Capital  Ventures  Ltd.’  goal  is  to  achieve  a  minimum  of  100%-­‐150%  return  on  capital  in  all  its  investments  conducted  under  the  framework  discussed  herein.  This  is  achievable  as  a  result  of  the  8ghtly  held  free  float  of  each  RTO  completed  by  Crea7ve  Capital  Ventures  Ltd.  Next: Investing in Creative Capital Ventures Ltd.
  30. 30. Next: Investment TermsCrea7ve  Capital  Ventures  Ltd.  is  an  offshore  registered  company,  with  one  hundred  percent  (100%)  of  its  common  shares  (vo8ng  shares)  owned  by  the  manager,  Euro  IPO  Services  Ltd  (BVI).  
  31. 31. •  Crea8ve  Capital  Ventures  Ltd.  has  Authorized  10,000,000  shares  of  Series  A  Preferred  Stock  (hereinaMer  "Shares")  at  US$10.00  per  share;  •  Shares  will  be  sold  at  US$10.00  per  share  prior  to  the  first  Net  Asset  Value  (NAV)  Calcula8on  and  then  at  the  NAV  thereaMer,  subject  to  the  3  day  "window"  following  the  calcula8on  of  the  NAV,  during  which  period  funding  may  be  refreshed;  •  The  Shares  will  have  a  CUSIP/ISN  #  for  bank  deposit  purposes  and  Crea8ve  Capital  Ventures  Ltd.  shares  will  be  listed  on  a  foreign  Stock  Exchange  for  NA  V  pos8ng  purposes  only;  •  Purchasers  of  the  Shares  will  face  a  One  Year  lock  up  period  and  then  must  provide  90  Day  no8fica8on  for  Redemp8on  at  the  NAV  calcula8on  on  Payment  Date;  
  32. 32. •  Crea8ve  Capital  Ventures  Ltd.  has  Authorized  10,000,000  shares  of  Series  A  Preferred  Stock  (hereinaMer  "Shares")  at  US$10.00  per  share;  •  Shares  will  be  sold  at  US$10.00  per  share  prior  to  the  first  Net  Asset  Value  (NAV)  Calcula8on  and  then  at  the  NAV  thereaMer,  subject  to  the  3  day  "window"  following  the  calcula8on  of  the  NAV,  during  which  period  funding  may  be  refreshed;  •  The  Shares  will  have  a  CUSIP/ISN  #  for  bank  deposit  purposes  and  Crea8ve  Capital  Ventures  Ltd.  shares  will  be  listed  on  a  foreign  Stock  Exchange  for  NA  V  pos8ng  purposes  only;  •  Purchasers  of  the  Shares  will  face  a  One  Year  lock  up  period  and  then  must  provide  90  Day  no8fica8on  for  Redemp8on  at  the  NAV  calcula8on  on  Payment  Date;  
  33. 33. •  The  NAV  will  be  calculated  on  the  last  trading  day  of  every  month.  The  NAV  calcula8on  takes  into  account  the  value  of  each  investment  the  company  is  long  in  terms  of:  cash  and  cash  equivalents,  Debentures,  Preferred  shares  and  Common  Stock  (free  trading  and  restricted  shares)  with  appropriate  haircuts  in  place.  The  NAV  computa8on  will  be  calculated  by  an  independent  outside  accoun8ng  group  based  on  industry  wide  methods.  •  Banking  and  Custodian  Services:  Caledonian  Bank  Limited,  Cayman  Islands,  www.caledonian.com;  •  Administrators,  Accountants  and  Advisors,  RRBB  Accountants,  www.rrbb.com  Next: Management Fees
  34. 34. MANAGEMENT FEESThe  Manager  of  Crea7ve  Capital  Ventures  Ltd.  is  Euro  IPO  Services  Ltd.  (BVI).  The  Manager  will  be  paid  a  2%  fee  on  Assets  Under  Management  (AUM)  on  a  quarterly  basis.  In  addi8on,  the  Manager  will  be  paid  the  following  Management  Incen8ve  Fee:  •  20%  management  Incen8ve  Fee  (paid  quarterly)  on  Net  Investment  CASH  Return  greater  than  7%  (Net  Investment  CASH  Return  =  Cash  profit  on  actual  stock  sales  over  the  quarter,  less  2%  management  fee,  i.e.,  20%  share  of  realized  cash  profit  above  the  9%  Low  Water  Mark);  •  40%  management  Incen8ve  Fee  (paid  quarterly)  on  Net  Investment  CASH  Return  greater  than  20%  (Net  Investment  CASH  Return  =  Cash  profit  on  actual  stock  sales  over  the  quarter,  less  2%  management  fee,  i.e.,  40%  share  of  realised  cash  profit  above  the  20%  High  Water  Mark).  Next: The Manager
  35. 35. THE MANAGEREuro  IPO  Services  Ltd  is  Bri8sh  Virgin  Island  registered  company  and  the  Manager  of  Crea8ve  Capital  Ventures  Ltd.  The  Managing  Directors  of  Euro  IPO  Services  Ltd.  are:  Julius Csurgo, Managing Director  The founder and Managing Director of Merger Law Associates Ltd. and Antevorta Capital PartnersLtd., brings over 40 years of entrepreneurial and financial experience.He has been involved in many facets of International business development in such fields as realestate, retail, resources, financial, healthcare and technology businesses, consulting for emerginggrowth companies and has tremendous experience in building highly successful enterprises, fromstart-up to profitability. He has nurtured many successful global enterprises, having been involved inraising over $10 billion for all types of international commercial projects.
  36. 36. Over the last 15 years, he has focused his consulting efforts on reorganizing and financing earlystage and micro-cap companies. This includes assisting companies to enter the international publicmarkets specializing in North American and European listing venues, with over 200 public listings tohis credit. He has a tremendous understanding of securities law, regulations, cross border settlementand capital formation.Mr. Csurgo specializes in OTC markets in Europe and North America , such as Frankfurt StockExchange, GXG Markets, AMEX, OTCBB, OTC Markets, CDNX,TXV Markets , and offshore centerssuch as Cayman Islands, Bermuda and Malta.
  37. 37. John Figliolini, Managing Director  A Financial Executive with thirty years of broad business experience in building businesses andcreating shareholder value. Mr. Figliolinis experience includes operational management, corporatefinance, strategic acquisitions, business development, merchant banking and corporate restructuringFrom 1982 to 1992 Mr. Figliolini held various executive management positions at the FinancialInstitutions he worked for. These positions ranged from Stock Broker to Sales Manager to Financial& Operation Principal to Chief Financial Officer and ultimately to Chief Executive Officer.From 1992 to 2013 Mr. Figliolini Founded and Operated Berkshire International Finance, Inc. (NewYork and Ontario) a boutique Investment Banking Firm. At Berkshire International Finance, Inc. Mr.Figliolini assisted over 50 public and private companies in raising over US$500 Million in equitycapital and taking companies Public via RTOs (reverse takeovers).
  38. 38. From 1994- 1998 Mr. Figliolini co-founded and advised three (3) Cayman Island registered mutualFunds (Offshore Venture Capital Funds) as well as one US registered Mutual Fund. One of theOffshore Funds was ranked #1 of all equity-oriented offshore funds for the fourth quarter 1994 byLipper Analytical Services and continued to be a top performing fund as rated by Lipper through1995.From 1998 to 2003 Mr Figliolini Founded and Operated an SEC registered broker/dealer (PhillipLouis Trading, Inc.) which made NASDAQ and OTC markets in 1,000 securities.
  39. 39. Andrew Gaudet, Managing Director, Investment Sales  Mr. Gaudet has an extensive background in the financial services industry, going back more thanfifteen years. His expertise includes working in Europe, Asia, Latin America and the Caribbean wherehis experience has included working with high-net-worth clients, investors and companies.Mr. Gaudet’s professional experience has included being the Senior Vice President-Capital Marketsfor Toronto and Bahamas based SG Corp., a corporate finance firm specializing in short termlending. His experience with SGC included the responsibility of relationships with banks, lawyers andfinancial partners as well as arranging syndicates for corporate finance projects.In addition Mr. Gaudet was the Managing Director for Caribbean based Richmond Consultants,which was a corporate consulting firm that created custom structures for development andinvestment projects. His activities included serving as resident director for family and corporatetrusts, investment banking for private offerings and initial public offerings (IPOs) and the formation ofinvestment funds in the resource, real estate development and energy sectors.