I’ll give you my initial thoughts on the 8K, but bear in mind that I’m still reviewing all the figures just like you.
It looks like Greg Boden from Bountiful Capital gave SLTD money back at the first of 2014 to purchase SUNworks in exchange for convertible notes.
It was decided to modify the language of the convertible notes and in the modification a clause was added that said Mr. Boden could at any time at his election after the effective date convert part of the note into shares and the conversion shall be cashless. By adding the phrase "cashless conversion" into the agreement the convertible notes became warrant derivatives that fall under different accounting guidelines under Generally Accepted Accounting Principles in the US (US GAAP).
As we saw with the Q3 financials, warrant derivatives when they are classified as liabilities (as in the case with SLTD) GAAP states that they have to be fair valued at the end of every quarter. They way that they are fair valued is by using certain inputs into the Black-ScholesModel. The fair valuing of the new warrant derivatives created some of the big figures you see on the 8K’s pro forma.
It appears, some of the warrant derivative was exercised but not all. This is the reason why we see an increase to the derivative liability balance and an increase to Additional Paid in Capital. The exercise added $20,392,397 to our Shareholders’ deficit which in return gave us positive Shareholders’ equity of $2,291,639 possibly to help us in uplisting. In return for the exercise of the warrant 26,115,000 shares were awarded. Everything impacting the financials is completely noncash.
