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$FWDG just made $10 million in "other income" for sure. There is no grey area in terms of this $10 million because it's pretty much guaranteed.
Another thing that just happened with this divestiture is that as of the transaction date, $FWDG's balance sheet turned in the right direction because now it has more assets than liability. Disposal of HempTech did not remove any significant assets off the books because only $100K represented what FWDG capitalized for HempTech. Take that out but add $10MM in notes receivable and market value of Infrax's common / preferred stock. This makes the balance sheet very, very attractive for other investors.
Same for Infrax. They just turned their books in the right direction too. They might be able to leverage HempTech's contracts to borrow + use what HempTech has coming from contracts it signed to pay off the note.
Really not sure how this will get divi'd out now. But here are some thoughts. In re of the common stock from Infrax, FDWG would be subject to affiliate/control persons rule so it can sell only 1% of the O/S per quarter or about 10 million shares. So, although the shares will be issued and outstanding, most of Infrax's shares will be held by FWDG if not immediately distributed. Pfd stock will most likely not distribute. Cash should distribute but just one part.
What investments did FWDG make to develop HempTech? Take that number and subtract it from $10 million. This was a very good deal for $FWDG no matter how you look at it because we just made $10 million.
They had to be the buyer. How was Infrax going to participate in the action for all their technologies when the deals were signed with HempTech? Talari tried to get $2 million in development fees for Infrax but couldn't get it because related party transactions come with a lot of legal liability. To claim the revenues of HempTech which ultimately uses Infrax's proprietary technology, they had to absorb HempTech somehow. In the process, they ended up getting absorbed by FWDG.
If HempTech will generate 100s of millions in revenues, Infrax shareholders should be jumping up and down as should $FWDG shareholders.
Always amazed when folks jump to conclusion without understanding the deal. This deal is actually very good for both $FWDG and Infrax.
The problem always was the fact that Sam was CEO of both companies and certain deals that would entitle HempTech access to all of Infrax's technologies and patents could not be done as they would not be considered an arms length transaction. This is why the $2 million development agreement had to be reconsidered twice, once in June and again in December 2014.
There had to be an agreement between HempTech and Infrax somehow, get Sam Talari out of Infrax but still allow him to control Infrax.
Selling HempTech to Infrax achieves all 3. This is actually an agreement that allows FWDG to beneficially own majority of Infrax now. We don't own their debt but the control of Infrax is now in $FWDG's hand because majority voting rights have transferred to us. In some ways, this deal could be considered an indirect acquisition of Infraxby $FWDG and it is not a poor acquisition due to their recent FCC certification for GrowCOMM.
The was broken down into 3 parts for a reason. The part that is the most solid is paid in cash which reflects the monies that $FWDG would get immediately. Even though it is a convertible note, HempTech has contracts that pays monthly so this means Infrax will have the money to make the installments. If the default on the installments, FWDG has the right to convert the notes into shares. The convertible note has a "true up" feature that guarantees an alternative conversion price or number of shares that would equal $10 million, so this is just as good as cash.
The common stock portion will lose value--it lost value as soon as the deal was done because 746,268,657 shares in common stock increases Infrax's O/S close to 1 billion hence instead of considering 1.3c per HempTech's common stock, one should consider 0,001 as the value for now.
The preferred stock was issued in case of future corporate actions of Infrax such as reverse stock splits or divestiture of Infrax's assets like Agritech. This is to control and protect what $FWDG is still owed. This is why it is convertible preferred stock. It can convert in the future after any splits. It also has dividend possibilities and so on. The value of the Preferred Stock, too, for now should be considered 0.001 and no more.
So, on the books of $FWDG, we are going to see fluctuating values of assets because marketable securities have to be marked to market for reporting purposes, therefore, the market price of Infrax's common stock at the closing date of a quarter determines the value of that portion of the commons FWDG owns. Preferred stock can be marked to $1.20 per share HOWEVER it would be foolish to think that the preferred stock of Infrax is worth $40 million. Consider them valued at 0,001 for now.
In conclusion, the actual--real--value of this transaction is $10 million + whatever the value of Infrax's common stock will be on any given day going forward. If HempTech writes contracts for all 237 acres, these 746MM shares could be worth quite a bit of money. If not, they will be worthless. Monies that are coming for SURE to FWDG is $10 million.
Was this a good transaction for $FWDG? ABSOLUTELY
Of course I can and will. As I've said before, my holdings do not influence what to/not to post. What I do ask, however, is that all understand that my comments are not to be construed as bashing--they are not intended to be inflammatory. I am interested in transparency, and when I feel shareholders are not being treated fairly, I will step up and bring to light what management needs to/must address and in short order. Let that be the basis.
What I see relationships-wise and on L2 has a very close Florida connection. Despite $FWDG's failure to report share issuance for debt conversion, it appears that some of our note conversions could be related to future partners of FWDG whether they'll be R/Merging or doing JV's. These partners appear to have utilized $FWDG as a vehicle to raise the capital they need to effect certain transactions in the future by entering into a CD relationship. It is an alternative way of raising capital in the absence of financing in this new space of "development stage" public entities who face challenges in getting financed. To understand this, think about $INCC's sub who recently placed the largest order for HempTech's LED lights. How would they pay for the order when they don't have cash or the cash flow to support such?
Answer: Buy debt from $FWDG and convert for cash.
This is not necessarily a bad thing. The only "bad" thing about it is FWDG's unwillingness to timely disclose the identities behind these conversions or the number of shares issued to each since November.
I have a fairly good idea on who these rats are now. And if they want to do deals going forward, they need to back the hell off and let the stock breathe.
Where?
I have no issues with Sam Talari getting shares for monies owed to him. I don't think anyone should work for free. My issue is that the number contemplated represents an over payment to him. If he wanted to get paid in shares for past due salaries, he could've done it when the stock price was at 4c or 2c or even 1c. There are plenty of shareholders who supported the stock at 4c, 2c and 1c. I spoke to another CEO earlier in the week and he gets paid in shares which he has not sold or been able to sell. He told me that the last thing he'd do is raise the O/S more, it makes no sense. Plenty of CEOs work without salary in OTC land.
Haha, my point exactly. You can't convert debt for services below market. You can convert at market or above market but not at a variable price to market unless you have a 3(a)(10) exemption. This means Talari has to sue the Company. CEO suing the company for salaries he didn't get? If the Company didn't generate enough cash to pay him, who's fault is that? Shareholders? So why punish shareholders with this now? Dumb.
He didn't get 400 million shares yet. Cox said he pulled it because the clearing firm did not consummate the conversion. He must be referring to the T/A, ClearTrust. Even if ClearTrust cut the cert, his broker will require a legal opinion letter. I'm wondering who'd be crazy enough to cut a cert or write the opinion letter without a 3(a)(10) exemption. I'm really, really curious to know how Talari came up with 400 million shares for ~ $1.4 million in debt. LOL.
There is money coming to $FWDG--I am more than convinced that this is the case. What I see here is greed, 1971. I get it--we're all human. Here's the angle: If Talari took 400 million shares for monies owed to him, that would make his holdings about 760 million shares. When the monies come in for HempTech and got divi'd out, he'd get most of the proceeds, wouldn't he?
LOL.
and onerous also means having legal obligations that outweigh the advantages . This is also an egregious mistake and a misstep on the part of all officers and directors of the Company. I asked Bill Short, COO, to step in and talk to Sam Talari about this.
This conversion will be presented as a way of cleaning up the balance sheet to make $FWDG almost debt free, but this is not the only way to accomplish that. We are well aware that $FWDG's balance sheet is flipped upside down and the factor that is troubling it is debt. They need to come off the books in order to obtain financing. We get it, seen it thousands of times over the years. BUT, the fact of the matter here is, the majority of the company's debt is for past due salaries to the CEO and to see him contemplate taking 400 million shares is really disheartening. It is disgusting. It is plain dumb.
LET'S DISCUSS THIS AND TAKE ACTION, $FWDG SHAREHOLDERS
Your email exchange with Cameron Cox helped me figure out a couple of things about the O/S confusion. I had initially thought that only a portion of 400 million shares represented Talari's debt conversion, but it is apparent that all 400 million shares were intended for him, and this is why we saw the 860,645,439 number on the last 10Q. If shares were not issued as of 2/17/2015, they should not go in the report because it only creates confusion. The first page of the 10Q should report what the O/S is ON the date of the report, not what it is as of the reporting period because the latter is supplied in the balance sheet.
If you read Cox's message carefully, it almost sounds as if the transfer agent refused to cut a stock certificate for 400 million shares, and/or if a cert was cut, the brokerage firm refused to clear it. There are some reasons for this which I will explain below.
Congrats!!! Enjoy your gift from the Heavens and some from $FWDG coming soon.
They ought to file it because it's really a big waste of company's resources to continue fielding emails from various shareholders concerning the same issue. That is what Reg FD is for -- inform all shareholders what Cox or Talari informed to only a few.
Understand your POV and thank you. Any 10Q is interim so any provisional filings can be admitted and/or contents therein can be deleted. A 10Q/A really is not meaningful in this regard. What could have meaning is what FWDG will close next week.
Respectfully, ptcgolf... We saw the statement from Cox that Talari withdrew his debt conversion for 400 million shares. Even if Talari had aged debt, debt conversion into common stock is not that easy even with a legal opinion letter accompanying the conversion notice, and when an insider is the party requesting conversion of debt, more scrutiny must be given from the side of the T/A. The reason is that ClearTrust, the T/A for FWDG, has SEC liability and could get in a ton of trouble by issuing stock to an insider and effecting a DWAC transfer.
But that Cox and other officers made a statement to a shareholder or more that the O/S remains unchanged and the statement had not been made to the public as a whole, my humble opinion was to request that FWDG make an 8-K filing under 7,01 to make it clear where the S/S stands.
My pleasure, and thank you for your kind words. The $FWDG forum has some really nice long shareholders who have contributed a lot of time and work into building DD on $FWDG. Ms. Strong, who has contributed tremendously, is taking care of family matters, and her work should not be forgotten as well as "dad" who has been with me for a long time on this stock. I kindly ask all to not take our "negative" comments as bashing but to receive them as constructive criticism directed at management.
My wish for all shareholders--management and insiders included--is to see an appreciation in the value of our investment.
Thank you all for your contributions!
God bless.
If the deal is done on Monday, we may not find out until Friday because they have 4 days to file a material event like disposition of assets. In general, they should file the 8-K first and do a PR release. So, all, don't be nervous if something doesn't come on Monday or Tuesday. There are formalities that must be observed and rules that must followed. Improper handling or dissemination of information at this critical stage could be dangerous.
Where the pps will go depends on the terms of the transaction and many other factors so I will reserve my comments until I see #s.
Thank you.
T/A is a gatekeeper and a regulated entity so a certification from ClearTrust would settle the moving numbers on O/S. It's really for the best. Cox and Talari are getting numerous shareholder inquiries--they should be left alone to run the company, so they're doing themselves a favor by uploading T/A's certification and filing Reg FD for all shareholders since he told you and not all shareholders or the public.
There is a right way to do something, a wrong way to do something and the best way to do something. 8-K 7.01 is the best and right way.
Thanks, AP. ClearTrust has some bad history so I am not very fond of this T/A. 465 million in O/S seems inaccurate based on volume and the number of days VFIN, VNDM, ATDF and AYME have been on L2 selling.
The best way to confirm the full, current S/S is for $FWDG to file an 8-K item 7.01 Regulation FD Disclosure and upload a certification from the T/A. We can move on then.
Good job, AdultProdigy.
Would you please do your fellow shareholders a favor and request that FWDG post a certification from the T/A?
Thanks.
Correct. We will find out next week!
That is not necessarily true. After $FWDG divests its subs--either via sale or spin-out as standalone--it will receive a combination of cash and stock for them. If they receive stock of another company, those would be stated as marketable securities which are assets in the balance sheet. They may hold the stocks and sell them when it's appropriate, and divi out proceeds. They'd dividend out a portion of what they receive and use other portions to incubate new companies within the Cannabis market. Rinse and repeat. This is what holding companies do. The planned exits are being accelerated, IMHO, because they need the cash to continue on.
My pleasure. Here is to some massive cheering next week, all!
Me like you a lot, too. :D
$FWDG -- >> show time soon.
I asked if they wanted to go on record for deal being done, Monday March 2nd. They appear confident that the deal will finish, so let's see!
They are selling HempTech and Futureland Properties. The other subs could be spun out as its own via a reverse merger or a S-1 registration. The latter is hard to achieve if you have nothing as a company, so if anyone wants URVape, they should R/M that unit. S-1 filing for CBScientific should be able to receive effectiveness from the SEC. Kindly note that S-1 registrations do not automatically get approved, but they have to be declared EFFECTIVE by the SEC, otherwise nothing is happening.
If you have doubts about whatever the company is anticipating to do, feel free to leave me a message on the board, and I'll try my best to share some insight.
FWDG just went on record on Twitter that deal will be done Monday.
That is the correct way to do it!
My thoughts on the delay are simple. FWDG is relying on work of third parties. Dick and Harry did the valuation report possibly at the request of auditors, and now we wait for auditor review and their FV assessment. This is where it gets a bit tricky and why FWDG should not put out timelines for events they have no control over.
Auditors will audit according to PCAOB standards and guidelines, not according to the timelines given by FWDG. The reason is this: PCAOB auditors have a duty to the public before they have one to a client.
Experienced management would not put out timelines for such events. But hey, Talari is probably excited about his first achievement of spinning out a sub that will actually produce value for shareholders ;) Being in the right market at the right time is key, they say.
1971, these numbers would go in another public company's books so I doubt it's going to be a stinky pinksheet company. Pinksheet like INCC do not file audited financials, so I doubt that it's any pinksheet including American Green. But then again, markets have surprised so let's see.
1971, HempTech/FWDG are meeting auditors this Friday (they just tweeted back). The FV (market value) of HempTech has to come from auditors. No one uses a valuation specialist's number to perform transactions between two public companies because the numbers have to be solid, and those numbers are assessed using FASB guidelines, specifically 157.
I'm thinking 2 more weeks...
If you hold $FWDG, you will be rewarded, IMHO, because despite the confusion and doubts discussed on the forum yesterday nothing changes the fact that there is measurable value in HempTech and Futureland Properties. If sold together to a party, they could be even more value.
I am ignoring the valuation summary report for $60 million because they are merely an appraisal based on the opinions of certified valuation specialists. This report is not enough to perform a FV measurement on either companies. What we do know is this: auditors will utilize FASB standards, most likely in-use valuation method.
If I ran numbers using some figures that are known to us and applied the in-use valuation method for HempTech, it gives me $15.7 million as minimum because I am allowed to take all 237 acres which are assets of Futureland a subsidiary of FWDG and sister company of HempTech. In other words, what is the first year baseline, fully leased # if HempTech assets were in-use with other assets under FWDG's control such as Futureland? What kind of revenues would that give the buyer? That is the question. And that figure according my in-use valuation is $15.7 million.
I can then use $15.7 million as my baseline calculation adjusted for risk and see what my 5 year revenues could look like. HOWEVER, this does not necessarily mean that I can get 15.7 million x 5 TODAY. That is nonsense and this is why the valuation summary should be ignored, and HempTech/FWDG ought to stop pumping the number on Twitter because they look like idiots.
What normally happens is the buyer will pay a premium above the in-use valuation figure which is fairly firm. Being in the cannabis market, the buyer could/may pay 2x.
So, a reasonable transaction value to me--if I were the acquirer--would be around $31 million for HempTech. I would not pay more than $31 million though, don't care what the valuation summary report says. If there is a buyer willing to pay 3x or 4x baseline, FINE.
Hope this makes sense.
Some clarifications about Valuation of HempTech
I had commented earlier to ignore the valuation summary report put together by Dick and Harry because these folks are valuation specialists. The ultimate responsibility of fair value measurements is that of auditorswho have to follow PCAOB standards. At the end, auditors are the ones that have to sign off on the FS so if the numbers are no good, they will adjust it. A good auditor may even request opinions/reports of several valuation specialists because of SEC liability associated with being a PCAOB registered auditor--they simply cannot put bad numbers in the books of any public company.
For the acquiring company which is also a public firm, it is more important because they're acquiring assets that--if not measured properly--would have to be written down.
As a reference, here is the registration info of DKM CPA who are FWDG's CPA and auditors:
https://rasr.pcaobus.org/Firms/FirmSummaryPublic.aspx?FirmID=399C71EC43D3E545140D4EF530BEF450
It doesn't make sense to banter about this $60 million valuation at this point because they are not auditors.
Trust this clarifies.
International Consolidated Companies is a pinky (non-reporting issuer) that had $31,080 in cash as of their last quarterly report. I don't care if the deal is done with a stinky pink as long as they can pay in cash. If a deal is done with a stinky pink for stock, that would not be nice at all as we'd have to manage worthless papers. Not worth my time.
Here is some perspective on Talari debt conversion. This is aged debt hence whatever # of shares issued to Talari (looks like a stock cert(s) was cut to him) could be free trading unless he voluntarily locked them up. This is another item that Talari et al must confirm via proper filing.
I am not aware of any "standard leak out provisions" for insiders other than Rule 144, however given Talari is majority holder of common stock, an insider and what the SEC defines as an affiliate, shares received from this debt conversion would be subject to affiliate rules:
If you are an affiliate, the number of equity securities you may sell during any three-month period cannot exceed the greater of 1% of the outstanding shares of the same class being sold, or if the class is listed on a stock exchange, the greater of 1% or the average reported weekly trading volume during the four weeks preceding the filing of a notice of sale on Form 144. Over-the-counter stocks, including those quoted on the OTC Bulletin Board and the Pink Sheets, can only be sold using the 1% measurement;
If you are an affiliate, you must file a notice with the SEC on Form 144 if the sale involves more than 5,000 shares or the aggregate dollar amount is greater than $50,000 in any three-month period.
If Talari opted to sell or transfer these shares to another party, they are definitely restricted.
Talari is on record for stating that he has not sold any shares, however even if he were to sell, he is limited to what the affiliate rules state. If we applied the "greater of 1% of O/S during any three-months" rule, we are looking at less than 8.6 million shares per quarter and he can sell less than 8.6 million shares only after filing a notice of sale (Form 144).
Contrary to what many might be contemplating, Talari cannot dump hundreds of millions of shares at once, so rest assured that there are governing rules that pertain to him and insiders. It would take him years to sell his holdings, in other words. Since he now holds hundreds of millions of shares, he has a vested interest in making sure the value of those shares appreciates.
Next comment is about the size of the Float. The float on $FWDG is still small because of Talari's holdings, and it will continue to remain small relative to the O/S.
Final comment is about the O/S itself: 860 million shares is not a big number for an OTC stock, folks. We have to consider the O/S and float together. There are plenty of OTC pigs with O/S 3x larger than $FWDG. A partner such as American Green ($ERBB) has 4 billion shares.
Once debt conversion by note holders ends (non-insider), FWDG will trade like a stock with 200MM O/S.
Please keep these finer points in mind.
They WILL get 'er done, dadx4.
FWDG is not bound to close the deal last or this week. But, they are on hook for making a few statements so we should hear from them shortly on this sale.