TheDirectory.com Inc (SEEK)

[Carini]

Fife did not purchase equity in SEEK, Fife loaned SEEK money and is now a SEEK creditor. This was plainly disclosed by SG on the conference call and then described in more detail in the 10-q. See my last couple of posts.

Fife paid SEEK's $250,000 balloon payment that was due Oct. 1 to CMS Domains on SEEK's behalf, and he has now basically assumed that debt as SG's creditor. Scott now has to pay Fife back in 8 monthly installments in either cash or shares.

The exact terms of the note are not disclosed, but DD on Fife suggests that he gets his shares at around a 70% discount of the lowest intraday price for the 5-15 days prior to the conversion. Unless SG was a good negotiator, then maybe it is tied to the lowest closing price or maybe volume weighted average price. But in any case you can be sure that Fife didn't do this out of the goodness of his heart. There were probably at least $20k in loan fees involved, plus an interest rate on the loan. Interest would be assessed if cash payments were made I imagine, and if payments are made in shares interest would be calculated into the conversion price.

Like I said before, Fife is basically acting as a predatory "ay-day lender."

By way of analogy: "Hey there buddy, I see you're having some trouble making your mortgage payment this month... how about I pay it for you so you can keep your house, and you just pay me back over the next 8 months with 30% interest..."