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This did not go over well with the
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Saturday, October 27, 2012 2:25:21 PM
This did not go over well with the SRGE Investors...received plenty of negative/threatening feedback by the likely individuals. But then none had a means of refuting what I put forth either - just more 'valuation' crunching.
Chairman Schapiro and SEC Enforcement Team,
Previously, I submitted information regarding what appeared to be fraudulent public claims about the share structure in Southridge Enterprises (SRGE). Since that memo was submitted SRGE has offered up additional evidence that questions the integrity of those running this company and puts into further question the accuracy of information being disseminated to the public. There is serious concern that fraud is being committed, and being peddled on public message boards in order to attack the interests and safety of the public markets.
On October 27, 2012 SRGE uploaded their financial documents for the month ending May 2012 on to the OTC markets website (
). This upload illustrates my past concerns regarding the accuracy of past statements regarding not only the share structure but other public statements.
When considering the accuracy of this filing as it relates to public safety, consider:
For revenues related to 3 months ending May 2012 SRGE claims $942,314. For 9 Months ending May 2012 the revenues are the same implying that 100% of the revenues took place in the quarter ending May 2012. SRGE has identified that in achieving this revenue (thru mining operations) , that their Cost of Goods Sold (COGS) was $0.00. Nearly $1 Million in revenues came without the expense of labor or other operational expenses (electricity, fuel, transportation, etc...). Without any COGS, SRGE presented a cash flow positive business operation netting a profit after expenses of $311,000. During this time the market in SRGE traded in the $0.0005 range.
Of interest to the SEC would be several press releases made by SRGE in September. In September the CEO of SRGE claimed under separate press releases that:
DALLAS, TX--(Marketwire -09/05/12)- Southridge Enterprises Inc. (SRGE) ("Southridge" or the "Company") is pleased to announce that it has recorded milestone mineral production and revenues for the fourth quarter and year ending August 31, 2012, from its 60 ton per day (tpd) mill site at Cinco Minas in Jalisco, Mexico. In fiscal 2012, the Company processed over 9,000 tons of ore and recorded revenues of $3.14 Million.
SRGE reported its operational and financial numbers for the fourth quarter of the financial year 2012. The company recorded record revenue and mineral production during the quarter. It produced 60 ton per day at Cinco Minas in Mexico during the quarter ending on August 31, 2012. The company reported its revenue for the quarter at $3.14 million. It also processed more than 9,000 tons during the quarter. Cinco Minas is the Company’s flagship mineral property.
Michael Davies, President and CEO of SRGE said, “Today’s announcement of our record revenues clearly shows our undeniable success in making the Company’s goals a reality.” The company also reported that Mexican Mining Registry of the Cinco Minas mineral concession ownership has been update to duly reflect in the company’s name. SRGE is also looking to get its reporting status back to the Over the Counter bulletin board.
So was the $3.14 Million representing quarterly revenues or fiscal 2012 revenues?
And while there is significant cause to question the accuracy of the financial reporting's of SRGE, so too come the questions of shares and share structure.
In this filing, SRGE claimed:
On November 4, 2011, the Company purchased 200,000,000 restricted shares at $.00625 from Novamex Mineral S.A. and retired these shares back to the Company treasury as part of the Share Buy-Back Program. The Company entered a 3 year, 6% interest promissory note for the original cost and purchase price of $1,250,000.
On May 30, 2012, the Company purchased 200,000,000 restricted shares at $.00625 from Novamex Mineral S.A. and retired these shares back to the Company treasury as part of the Share Buy-Back Program. The Company entered a 3 year, 6% interest promissory note for the original cost and purchase price of $1,250,000.
On both occasions the current open market price in the stock was in the range of $0.0005 to $0.0007 or 1/10th that in which these shares were purchased. SRGE was paying 10X market value to buy back these restricted shares and did so without having the revenues or capital to do so. Where did the $2.5 Million come from? It does not appear to show up in the financial documents they posted to the OTC. In fact, the financial report does not support the wild claims about the entire stock buy back program.
SRGE claims that they returned 200M in Nov. 2011 bringing the O/S to 843M on Nov. 30. (843M + 200M >>> Authorized of 1 Billion shares). Since this 200M was restricted shares repurchased, and since the Feb 2012 Restricted was 600M this would imply that the restricted was 800M prior to Nov. 2011.
SRGE claims Feb. 2012 O/S = 843M Float = 242M Restricted = 600M
SRGE claims they returned 200M in May 2012 bringing the O/S to 800M on May 31
Net delta between Nov. 2011 and May 2012 is -43M shares despite 400M shares claimed returned to treasury.
Float on May 31, 2012 = 400M. More than 200M was retired but float increased from 242M to 400M. Restricted shares reduced from 600M to 400M per the filing claiming it was restricted shares repurchased.
SRGE Claimed in a press release that on Sept. 19, 2012 O/S = 546M Float = 215M Restricted = 330M SRGE claimed in that press release that on Sept 19, a total of 444M shares had been retired to treasury to date.
The Company also announces it is continuing their share Buyback with plans to increase the overall program. To date, Southridge has bought back a total of 443,576,000 shares and retired them to the treasury. The total outstanding shares to date are 545,874,868 with a Public Float of 215,957,230 and Restricted shares 329,917,638.
Taking into consideration this most recent financial filings that are clearly misleading and harmful to the public, and based on the significant number of irregularities between the recent public statements being made and the supporting evidence refuting the accuracy of these statements, it is imperative that the SEC investigate the activities taking place in SRGE and take actions necessary to protect the rights of the investing public. What I have put forth here is only a small percentage of the evidence that would lead most into believing that this company is a fraud.
With nearly 20 Million shares or more trading on any single day, and trading in a range of $0.005 - $0.007, there is a significant amount of capital changing hands on a daily basis. The SEC should consider this when considering whether a trade halt is required to allow for the company to provide evidence of what is being presented to the public.
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