As I recall, there are approximately 10,000 $TZROP Investors. Expressing my sole opinion, I have invested in the $TZROP primarily because I want to see a change in the “transparency” of the U.S. Financial Markets via the adoption and application of tZERO‘s Blockchain-based Technology. I would love to see Middlemen (aka: Market Makers) made obsolete & extinct. I believe a financial system of trade & settlement that gives the “competitive edge” to a Middleman is flawed & rotten at the core and inherently unfair to investors. I believe that tZERO’s Blockchain Technology should be “unleashed“ with the ability trade & settle transactions at T+0 instantly (On Chain, using blockchain technology), allowing for Self-Custody & Self-Clearing of traditional U.S. Equities/Stocks, Digital Securities, Cryptocurrencies, NFT’s, etc.
My financial motivation or investment objective with the $TZROP is for massive growth of the $TZROP to happen with the payout of a potentially large “Power Ball“ size dividend income. I continue to accumulate the $TZROP.
Following the September 1st, 2021 tZERO Update and Q&A Session, I have taken some time to review the “structure” of the $TZROP.
tZERO Management should remove the $TZROP “redemption” clause (See below) in order to enhance the “long term value“ of the $TZROP for “long term” investors. Why? —> Because the early $TZROP investors have taken the most risk; therefore, the early investors in the $TZROP should be able to have the option to ”get very rich” —> instead of potentially getting “redeemed” for the benefit of the tZERO Common Shareholders just as the business strengthens significantly. I’m not saying this will happen, but I am pointing out that it could happen. Just my honest opinions.
I am also interested in hearing suggestions from other $TZROP Investors of ways to potentially enhance the value of the $TZROP (other than seeing the fundamental strengthening of tZERO). Thanks in advance.
Copied below are excerpts from the most recent tZERO Group, Inc. Disclosure Statement and also the prior tZERO Offering Document.
I quote:
<< Holders of TZROP will have no rights with respect to our common stock.
Holders of TZROP will have no rights with respect to our common stock, and no right to convert shares of TZROP into shares of common stock or to exchange shares of TZROP for shares of common stock. Holders of TZROP will not have any voting rights, other than with respect to amendments to the TZROP certificate of designation and as may otherwise be required under Delaware law, have a limited liquidation preference of $0.10 for each share of TZROP, and have the right to receive dividends in preference to the holders of the common stock. For additional information, see the TZROP certificate of designation, attached hereto as Exhibit 4.
tZERO has the right to redeem TZROP
We may redeem some or all of the TZROP at any time. The redemption price for tZROP would be either (i) its fair market value (if any) as determined in good faith by tZERO’s board of directors (but, in no event, less than $10.00 per share of TZROP) or (ii) if no market value is determinable at such time, USD $10.00 per share of TZROP (the “Redemption Price”). The Redemption Price, in the sole discretion of tZERO, may be paid in U.S. dollars, Bitcoin or Ether. If we elect to redeem TZROP, the holders of such redeemed shares face the risk that the return on an investment purchased with proceeds from such redemption may be lower than the return previously obtained from the investment in TZROP.
Our obligation to pay dividends on TZROP is limited, our ability to pay dividends on TZROP may be limited and we do not expect to pay any dividends for some time in the future.
Our obligation to pay preferential dividends on TZROP is subject to our board of directors declaring such dividend payments and will be paid only out of funds lawfully available for such payment when consolidated GAAP net income exceeds 10% of tZERO’s consolidated GAAP gross profit, as reported in the Company’s consolidated financial statements for the most recently completed fiscal quarter. For additional information see the TZROP certificate of designation, attached hereto as Exhibit 4. Consequently, our failure to pay preferential dividends on TZROP might have no legal effect on us at all, although it could adversely affect the liquidity for, and trading prices of, TZROP. Further, our payment of any dividends will be subject to contractual and legal restrictions and other factors our board of directors deems relevant. Further, we may elect not to pay dividends on TZROP rather than limiting other proposed expenditures, including expenditures that may not be contractually required. Moreover, agreements governing any future indebtedness of ours may further limit our ability to pay dividends on our capital stock, including TZROP. In addition, our ability to pay dividends is limited by applicable law. We have not paid dividends historically and can provide no assurances as to when dividends might first be paid, if ever. Any failure to pay dividends could have a material adverse effect on the holders of TZROP and on the liquidity for, and trading prices of, TZROP.
tZERO may issue preferred stock senior to TZROP
tZERO may issue preferred stock with that has a higher dividend or liquidation preference than TZROP, and which could restrict dividend payments or other distributions on TZROP. tZERO does not require consent of holders of TZROP to issue securities senior to TZROP. If tZERO were to issue such securities, it could have a material adverse effect on holders of TZROP and the liquidity for, and trading prices of, TZROP.
TZROP will rank junior to all of our and our subsidiaries’ liabilities in the event of a bankruptcy, liquidation or winding up of our or our subsidiaries’ business.
In the event of our bankruptcy, liquidation or winding up, our assets will be available to make payments to holders of TZROP only after all of our liabilities have been paid. TZROP only has a limited liquidation preference of $0.10 over our common stock in the event of our bankruptcy, liquidation or winding up. In addition, TZROP will rank structurally junior to all existing and future liabilities of our subsidiaries. Holders’ rights to participate in the assets of our subsidiaries upon any liquidation or reorganization of any subsidiary will rank junior to the claims of creditors. In the event of our bankruptcy, liquidation or winding up, there may not be sufficient assets remaining, after paying our and our subsidiaries’ liabilities, to pay any amounts to the holders of TZROP then outstanding. We may incur significant debt or other liabilities in the future, and TZROP contains no covenant or restriction on our ability to incur debt or other obligations. Any bankruptcy, liquidation or winding up of our company or any of its wholly or partially owned subsidiaries would have a material adverse effect on the liquidity for, and trading prices of, TZROP.
TZROP
Our tZERO Preferred Equity Tokens (“TZROP”) are classified as Stockholders’ equity within our Consolidated Balance Sheets. TZROP holders have the right to, prior to distributing earnings to common stockholders, a noncumulative dividend equal to 10% of our consolidated Adjusted Gross Revenue (as defined by the TZROP offering documents) for the most recently completed fiscal quarter, if declared by our Board of Directors, to be paid out of funds lawfully available on a quarterly basis. TZROP holders are not entitled to participate in any dividends paid to the holders of our common stock, have no rights to vote, and have no rights to the undistributed earnings and are not entitled to any utility functionality as part of the TZROP. Any remaining undistributed earnings or losses of the Company for a period shall be allocated to the TZROP holders based on the contractual participation rights of the security to share in those earnings as if all the earnings for the period had been distributed. In the event of any liquidation, dissolution or winding up of the Company, the TZROP holders will be entitled to the limited preferential liquidation rights equal to USD $0.10 per token to the extent funds are available.
At December 31, 2018, cumulative proceeds since December 18, 2017 from the TZROP offering totaling $104.8 million, net of $22.0 million of withdrawals, have been classified as Stockholders’ equity within our Consolidated Balance Sheets. As of December 31, 2018, tZERO incurred $21.5 million of offering costs associated with the TZROP offering that are classified as a reduction in proceeds within Additional paid-in capital of our Consolidated Balance Sheets. As of March 31, 2021, there was 20.8 million TZROP outstanding. >>
