To those who have an interest in learning more about Cruzani and our vision, we offer up this blog.

As with every other form of communication in the public market space, there are limitations to what can be discussed in this forum, however, the intention here is to explain, in more detail, our goals and objectives plainly and directly.

Our two main objectives are:

1) Continue to grow our asset base, increase revenue and strengthen the balance sheet with the as minimal dilution as possible.

2) Position the company to up list onto a higher exchange small cap tier sometime next year.

I will expand on these stated objectives in more detail in future posts when it appropriate.

We would also like to provide meaningful dialogue and information to any investors unfamiliar with operating a public company at this level.

First, to grow Oventa Foods Inc. requires a capital investment. As was previously disclosed in the exhibit to our 8k, when the Oventa acquisition was completed, we anticipate that it will cost approximately $3 million to fully recognize the $15-$25 million revenue capacity of the facility. As an offset to this investment, and to protect our shareholders, and increase our value, we gain title to nearly $7 million in hard equipment assets and an additional security lien on a building valued at $8.5 million.

Secondly Recipe Food Co. and the re branded TruFood Provision Co, will require smaller amounts of capital for growth and we can stage their growth more slowly as the market cap will bear.

I would like to now provide some dialogue related to funding at this stage in the company’s development:

We basically have two forms of funding available to us, debt (convertible…ie mostly toxic) and equity (using our own securities).

For any readers unfamiliar with convertible debt funding I’ll break it down as follows; A note is issued to the company using our stock as a guarantee. Most of these forms of debt instruments have expensive repayment provisions which can cost between 20% to 40% in the first six months of the note. If the note isn’t repaid within that time frame, the lender then has the right to convert these shares at a discount to the market price that is commonly between 35% and 60%. Such conversions often create a downward spiral effect since the note holder always has a cost basis lower than the current market price. In This senerio, the company has no control over how or when the shares are sold. Additionally, this type of financing creates a huge derivative liability. This type of liability is an inhibitor to up listing. Simply put, convertible debt is not a viable option to consider for a company looking to establish and cultivate strong shareholder value.

That leaves us with the two basic types of equity based lending as far friendlier options; Regulation A or S1.

We chose the S1 over the Reg A because it can be variable priced and because it is far less expensive.

With the Reg A, if the stock price varies more than 20%, PubCo’s then have to re file it. That is a time consuming and expensive process. In addition, the standard discount to market expected by Reg A  funding sources is 30 to 35%. In addition, we would have to drop back to alternative reporting status.

The company was able to obtain an S1 financing commitment with a built in 15% discount to market. This is a very reasonable capital cost. There are a couple of rules however; the stock must trade above 1 cent per share and the company must be OTCQB certified. These qualifications are why a reverse split was mentioned in the S1 filing. Another major advantage, to an S1 in addition to cost, is that the company controls the dilution giving us the option to draw on the S1 or not. There are also anti short selling provisions in agreement with the counterparty.

I can sincerely say that I hope a reverse won’t be necessary to meet the requirements of the S1. We have nearly $7 million in hard assets and are approaching $2 million in per annum revenues, and yet our market cap is less than $1 million. Given our current vastly undervalued conditions, we had no choice but to build in a reverse split back up plan into our S1 to assure we can meet our stated 2019 targets.

With that said however, we have definitely NOT filed for a reverse split. Filing for a reverse is a process that requires two notification periods and FINRA approval. Generally, it takes at least 40 days to file for and complete a reverse, and we can amend the S1 at any time before it’s ever deemed effective, and eliminate or lesson the ratio of the reverse, if needed.

Candidly speaking, it takes capital to grow a business as I know everyone is aware. What should be looked at right now is, are we obtaining the most efficient funding that is the least impactful, and are we offsetting the dilution by spending wisely and increasing shareholder value.

It is my sincere hope that this blog will become a useful tool in helping our shareholders and supporters understand some of the steps we take to achieve the goals.

Everett Dickson