Merge news was out yesterday through 8k filling since it wasnt a press release that one didnt really hit the wires yet ! It is moving very well on very strong volume ! No real resistance here until 0,004 ! Good entry point now around 0,0033 imo
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(Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On October 15, 2005 Reality Wireless Networks, Inc. ("Registrant") and Arabian Recab For Trading Co., ("Recab International"), entered into an agreement to amend (the "Amendment") their merger agreement, dated July 21, 2005 (the "Agreement"), previously reported on Form 8-K filed July 27, 2005. The amendment provides the acknowledgment of the parties that the Effective Time of the Agreement is August 19, 2005. The parties intend to seek shareholder approval for the formal name change of the corporation from Reality Wireless Networks, Inc., to "Recab International Inc.," as soon as practicable.
Section 5 - Corporate Governance and Management
Item 5.03 Change in Fiscal Year
In furtherance of the merger between the Registrant and Recab International (as referenced above), the Registrant has changed its fiscal year, from a fiscal year ending September 30 to a fiscal year ending December 31, consistent with the fiscal year of Recab International. The Registrant shall file a Form 10QSB for the period ending September 30, 2005 and a Form 10KSB for the period ending December 31, 2005.
EXHIBIT NUMBER DESCRIPTION LOCATION 2.3 Fist Amendment to Agreement and Plan of Merger Filed Herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
REALITY WIRELESS NETWORKS, INC. (Registrant)
Date: October 19, 2005
/s/ Steve Careaga -------------------------------------- Steve Careaga, Chief Executive Officer
THIS FIRST AMENDMENT to the Agreement and Plan of Merger between Reality Wireless Networks, Inc., a Nevada corporation ("Reality"), Reality Acquisition, Inc., a Washington corporation ("Acquisition Sub"), and Arabian Recab for Trading Co., a corporation duly incorporated under the laws of Saudi Arabia ("Arabian Recab"), dated July 21, 2005 (the "Agreement"), is entered into on this 7th day of October 2005, is hereby amended as follows (the "Amendment"):
RECITALS
A. Reality, Acquisition Sub, and Arabian Recab (collectively, the "Parties") entered into an Agreement and Plan of Merger on July 21, 2005;
B. In furtherance of the merger, the parties wish to amend the Agreement in order to clarify and acknowledge the terms defining Effective Time (defined herein) of the merger and the resulting obligations thereby created.
C. Unless otherwise defined in this Amendment, capitalized terms have the meaning as defined in the Agreement.
Accordingly, the parties hereby agree as follows:
I. Section 1 of the Agreement is hereby deleted in its entirety and replaced as follows:
1. MERGER.
1.1. Effect on Capital Stock. As soon as practicable following the Effective Time, by virtue of the Merger and without any action on the part of the holder of any Recab Rights or any shares of capital stock of Acquisition Sub:
(a) Capital Stock of Acquisition Sub. Each issued and outstanding share of capital stock of Acquisition Sub shall be converted into one Recab Right that shall be held by the corporate-entity Arabian Recab (the resulting stock referred to hereinafter as "Treasury Stock" of Arabian Recab).
(b) Cancellation of Treasury Stock of Arabian Recab owned by Arabian Recab. Each share of Arabian Recab that is owned by Arabian Recab shall automatically be cancelled and shall cease to exist, and no consideration shall be delivered or deliverable in exchange therefore.
(c) Conversion of the Arabian Recab Shares. All Arabian Recab Shares (other than shares to be canceled in accordance with Section 1.1(b)) shall be converted into fully paid and nonassessable shares of common stock, par value $0.001 per share, of the Reality Shares necessary to give effect to the relative ownership of Reality Shares by Arabian Recab Share holders expressed above in Recital D. As
of the Effective Time, all the Arabian Recab Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate representing any such shares of Arabian Recab Shares shall cease to have any rights with respect thereto, except the right to receive the portion of the Reality Shares to be issued in consideration therefore in accordance herewith.
1.2 Resultant Obligations: Unless this Agreement is validly terminated prior to the Effective Time, the Parties agree to the following:
(a) Effective Time. The Parties agree and acknowledge that the "Effective Time" shall occur on August 19, 2005.
(b) Articles of Merger. As soon as practicable following the Effective Time the Parties shall file Articles of Merger ("Articles of Merger") in accordance with applicable provisions of Saudi Arabia, Washington law and Nevada law (the "Applicable Law"). The Articles of Merger shall be filed together with any other filings or recordings required by the Applicable Law in connection with the Merger.
1.3 Procedure. Each and all of the Arabian Recab Shares outstanding immediately prior to the Effective Time shall, as soon as practicable following the Effective Time, be exchanged for a certificate or certificates evidencing ownership of the applicable number of the Reality Shares. The Reality Shares exchanged for Arabian Recab Shares shall be referred to herein as the "Closing Shares".
1.4 Name Change. As soon as practicable following the Effective Time, the articles of incorporation of Reality shall be amended such that the name "Reality Wireless Networks, Inc." shall become "Recab International, Inc."
II. Section 2.1 of the Agreement is hereby deleted in its entirety and replaced as follows:
2.1 Date, Time and Place of Closing. The Merger contemplated by this Agreement shall take place at a closing to be held at The Otto Law Group, PLLC, and shall be deemed effective upon the execution of this Agreement (the "Closing"), and shall remain subject to completion and satisfaction of certain conditions subsequent to the Closing (the "Conditions Subsequent"). The date on which the Closing occurs is referred to in this Agreement as the "Closing Date."
III. Section 2.4 of the Agreement is hereby deleted in its entirety and replaced as follows:
2.4 Schedule 14C. As soon as practicable following the Effective Time, Reality shall prepare and file with the SEC a Schedule 14C to disclose to the shareholder approval of the following:
(1) The change in entity name from Reality, Inc., to Recab International Inc., and
(2) A reverse split of the issued and outstanding Reality common stock (the Reverse Split") such that the pre-Merger Reality shareholders shall retain a post Merger, post Reverse Split ownership interest of not less than two percent (2%) of the merged entity immediately following the time at which the Reverse Split becomes effective.
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed as of the date first listed above.
Reality:
REALITY WIRELESS NETWORKS, INC.:
By: /s/ Steve Careaga ---------------------------- Name: Steve Careaga Title: Chief Executive Officer
Arabian Recab:
ARABIAN RECAB FOR TRADING CO.
By: /s/ Patrick Lochrie ---------------------------- Name: Patrick Lochrie Title: President and Chief Executive Officer
ACQUISITION SUB:
REALITY ACQUISITION, INC.
By: /s/ Steve Careaga ---------------------------- Name: Steve Careaga Title: President and Secretary
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Anyone read about the revers split and name change? Anyone worrried about it?
-------------------- You can learn many things from children.......... How much patience you have, for instance. Wealth and children are the adornment of life. I have 5 children and 32 day care children now working on the wealth part. heheheh
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Form 8-K Unscheduled Material Events filed. Should I be worried about the RWNW financials noted in this form or am I missing something? I thought from all my reading they were making big profits? They said that when the finantials were published it would cause (to paraphrase) eyebrows to rise, and pretty much assured this would raise the stock price, but I dont see anything glowing in what I read. Reading all the news RWNW puts out, the picture seemed brighter, but hearing that they have been delinquint paying their bills and having complaints raised against them does not seem to be too good. I mean, is this really a STRONG BUY situation? Reading what I read it seemed like going bankrupt is necessary if they cant make some money. Does anyone know how stable their chances are of really going to the bulliten boards and then much higher in price? I really would appreciate it if somone who knew more than me about this company could reassure me that I should stay invested in them. Thank you.
-------------------- Who ever said "The sky is the limit", limited themselves to only the sky. To be filthy rich, simply make that possibility a probability, and then be patient. Dreams, my friend, can indeed come true if you but believe they can.
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How can they afford to merge with RECAB if they can't pay their bills? Or is this good news because now their bills go bye bye because RECAB is rich? I guess I don't know how to do the math but I am in the stock and hoping.
Anyone know?
-------------------- Who ever said "The sky is the limit", limited themselves to only the sky. To be filthy rich, simply make that possibility a probability, and then be patient. Dreams, my friend, can indeed come true if you but believe they can.
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posted
Glad I added shares *.0022 last week. That was a great buy wish I bought more.Had 5 mill.but it wasnt doing anything moved the money elsewhere and now it decides to move.Could be a new bottom
I have broken down this post into three parts. Please make sure you really understand everything in ?Part 1? before going on to ?Part 2? to fully understand everything in ?Part 3? and to help make sure that I am not seeing something that is too good to be true. Part 3 will be the most powerful part, but again, understanding Parts 1 and 2 will help in understanding how I got to Part 3.
The company has made it known that current RWNW shareholders represent 2% of those 497,685,321 shares outstanding. At first thought this sounds horrible, but it is quite the contrary. It tricked me a bit too if it makes you feel any better.
The remaining 98% of RWNW shares going to the new reverse merging company equates to 487,731,615 shares.
That shareholder?s 2% equates to 9,953,706 shares. This is the maximum amount of shares that should have always been in the Float for the public to buy.
The share structure must remain as has been filed with the SEC because of the consistency required for reverse merger purposes to establish official accountability of shares from all merging entities.
This means that only 9,953,706 shares should have been allowed to transact as the ?total? amount of buys between the Depository Trust Company (DTC), our brokerage companies, and the Market Makers (MMs).
Let me better put it like this; this means that after all of the buying and selling of RWNW shares, at the end of each day, only 9,953,706 shares should be the total that?s in all of our brokerage accounts combined. Well, since the announcement of this merger, hundreds of millions of shares have been bought and held in all of our brokerage accounts well above the legitimate Float of 9,953,706 shares.
Imagine if only 10 of us bought 1 million shares to total 10 million shares bought. That would mean that the Float would be gone and that somebody probably has some naked shorted shares. The MMs can?t have naked short shares sitting in other peoples when the time comes to transact the shares by the distribution ratio.
The MMs will have to buy those shares that have been naked shorted to account for them as they have been fictitiously and electronically created. This is the covering that should take place until enough shares are sold by us current RWNW shareholders to assist them in covering.
Unless I missed something, the OS for RWNW post reverse merger will be 48,163,265 shares. This means that there will be a reverse split ratio of 497,685,321 ?,163,265 = 10.33 shares. So the ratio will be a 1 to 10.33 reverse split ratio.
Another way of looking at it is that for every 10.33 shares of RWNW that we buy now, we will get 1 share of the newly reverse merging company. So when you go through the filings and all of the PRs, the 2% and 98% breakdown of distribution percentages really only equate to a 1 to 10.33 reverse splitting of our shares as a worse case scenario.
The 48,163,265 shares minus the 47,200,000 that?s listed as what the 98% equates after the reverse merger equates to 963,265 shares. Multiply this by 10.33 to verify to see if it matches what 2% of the current OS and you get the a very close 9,950,527 shares which are only slightly off by a few decimal places falling short of less than 3200 shares pre-split. This is a normal margin for error.
When I called Saudi Arabia to speak with the CEO, Dr. Faidl, I didn?t understand why he was telling me that this is a great deal for the current shareholders of RWNW, but now I do.
Now, before going any further, please go back and review what I have mentioned thus far because the next two parts I reflect upon will seem too good to be true. So please review to make sure that I am thus far making sense.
Part 2 Review some key points below that were brought out in previous PRs to help see why I like this reverse merger scenario better than any of the other ones I previously mentioned:
http://www.knobias.com/individual/public/news.htm?eid=3.1.728e84966cba5977e27259de76b8db7d276a261e90c5dce75a87be9cd6f63552 * The merging company generated $29 Million in revenues for the year ended December 31, 2004. * The merging company is a well established Saudi Arabia Transportation Company that has been around for 25 years. * The Auto & Equipment division imports and sells commercial passenger vehicles from Mercedes Benz, Toyota, Mitsubishi, Hyundai and Volkswagen. * The merging company has contracts with sole agents of Toyota, Nissan, Mitsubishi and others to transport new vehicles throughout Saudi Arabia. * And more?
Part 3 Let?s now apply some fundamentals from the facts from the revenues we know that have been and will be generated. From looking at the amount that was publicly given to us in previous PRs, it appears that RWNW will be generating $29 Million to $61 Million per year. It was mentioned that the company expects to clear at least $25 Million as profits which still could be on the low end. For our purposes, I will consider RWNW only making the low end of $25 Million per year as profits as a worse case scenario. This means that RWNW would net $25 Million as Income to be filed in their financials post-reverse merger/split. From this, observe below to get a feel of where RWNW should be trading at post-reverse merger given the post-reverse merger OS of 48,163,265 as we derived from above:
$25,000,000 ?,163,265 = .519 cents EPS (Earning Per Share)
Multiplying that .519 cent EPS with a conservative PE Ratio of 12 and you get:
.519 x 12 PE Ratio = $6.22 per share post reverse merger
But wait? 12 is a very conservative PE Ratio that many use to keep from hyping a stock. If you were to use the PE Ratio for the industry that RWNW will be trading under after the merger, the price used could have been 2 to 4 times more than the $6.22 post-reverse merger share price.
From the thoughts I shared above, the reverse merger/split ratio will be about 1 to 10.33 so we will round off by saying that for every 1,000,000 shares you buy pre-reverse merger, will be converted over to 100,000 shares post-reverse merger for simplicity sake.
This means that if you bought 1,000,000 shares at yesterday?s closing price of .0026 cents, you would have paid $2600 for them. From the above logic, your 1,000,000 shares would convert to 100,000 shares and have at least a fundamental value of $6.22 per share as I had shown above. This means that your $2600 investment could potentially bring you back a return of:
100,000 x $6.22 = $622,000 (Back in return from original $2600 investment.)
The key is to find the current pre-reverse merger price of equilibrium to know where the price of undervaluation for buying RWNW no longer exists. I would want to know the equilibrium price for pre-reverse merger versus a post-reverse merger potential fundamental price to know where the price increase in RWNW would reach a type of ?law of diminishing returns? to where the market for RWNW shares would be over saturated from a particular price level.
I will use a post-reverse merger price of $6.22 per share and the 100,000 share example as retrieved from the info I posted above. The new value of your new position would then equate to $622,000 as from above. This means that you must determine the price for when buying your 1,000,000 shares now in RWNW would be worth $622,000 in value to know when the market should stop buying shares of RWNW. To figure out such, observe below:
$622,000 ?000,000 shares pre-split = .62 cents per share
This means that right now from the due diligence that I posted above, RWNW should currently be trading at the .62 cents per share price range pre-reverse merger. This is still conservatively speaking. I know this does seem to good to be true, but this is what I have come up with thus far from doing my DD.
I think when people see the 2% going to current shareholders versus the 98% going to the company, immediately anger and confusion as to why is created. I see it as being given shares of MSFT at $2.00 while it is trading at $25.00 per share. I could care less the ratio as long as me buying a million shares of RWNW now would convert over to that 1 to 10.33 ratio for getting those Microsoft shares as I have just hypothetically mentioned.
Now with all that I posted above, consider again that there is a naked short existing somewhere in the hundreds of millions of shares from researching the volume history. I am guessing that the MMs need to cover RWNW before RWNW actually goes to a market such as the NASDAQ from guessing at the reasons why a 25 year old multi-million dollar company would reverse merge into an already NASD OTCBB trading company.
Again, the above is what I have derived from doing my DD on RWNW. Please make sure you do your own DD and please feel free to correct anything you find that is in error. I really believe that we have something here with RWNW to bring about huge prosperity to many as I have always hoped for.
posted
I think any naked short would be in serious need of being covered if the substance is produced in the financials as what they PR-ed. The main reason would be because I think that RWNW’s immediate goal is to trade on the NASDAQ, AMEX, or NYSE.
Why would they even go through all of this to continue trading on the OTCBB in which they currently are trading? If RWNW is now a multi-million dollar company from my understanding, then RWNW has outgrown itself for the OTCBB just from the merger alone. A higher market is a must.
The Market Makers (MMs) would not want to leave any shares behind uncovered within the realm of the OTCBB and the new RWNW moves on to a higher exchange. This is why it is important for the name change and ticker change. This added with going to a higher market should force a covering that would not materialize if they were just simply remaining in the penny world. IMHO
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