Okay...
Have you ever heard Cash Call OR any other Payday loan center?
In some states, they're outright outlawed.
In some states there are variations of them like if you own the note on your car, you can bring it in and get a small loan using your car as collateral.
Say you own a 2010 Acura. It's bought and paid for. You have the title tucked away in a special file.
It's worth $8000.00 because you've kept immaculate care of it, and the mileage is super low. It's in "like new" condition.
Life gets rough and you need cash.
You go to one of these "lenders" who take your title and give you $1500 cash.
They charge an insane interest rate and if you miss a payment, they come tow your car.
You make 20 payments of $100 per month.
You've literally paid back every penny you borrowed plus interest and you miss the 21'st payment.
They come and tow your car.
They got back their $1500. They even made over 30% interest. Now they own your car, which they sell for $8000 bucks.
They've made 1000%s of returns.
But wait, there is more.
You see, they don't have the capital to dole out $1500 bucks every time someone is hard up for cash...they have investors.
They know they'll earn 100% at the auction block so they turn around and sell derivatives.
They tell investors they'll make 30, 40, 50% returns on an investment.
So investors buy the debt.
(There's a premium charge of 3-10% on the purchase) so the guy that took your title makes between 50 and 70% on the deal he made with you AND he makes 3-10% pure profit on selling your debt to another.
Basically, that facility is guaranteed to make 53% or MUCH HIGHER on every contract.
(Oh how I wish I'd gotten into that instead of trading stocks, forex, commodities for a living)
Now back to CashCall.
They make you sign an agreement where you agree to pay back 138% ANNUALLY over the life of the loan.
Borrow 25K?
Fine?
You'll pay back nearly 100K over the life of the loan. Illegal in some states. Should be illegal everywhere.
Well, they do the same thing... They seek investors who look for 30% returns. They sell them your debt at a fee. They make the fee (pure profit) and they hope beyond hope that you pay 100 payments and earn everyone money.
Payday loans.
Strapped for cash?
Come see them (illegal in some states, should be illegal in all)
Write a post dated check for $200.00
Pay your rent, fund a night out, WHATEVER.
You wrote the check for $200. But you only got $160 in cash on the spot.
You basically just paid 15% on your money.
SFOR:
They needed money. They inked a deal where they got $1,000,000 GUARANTEED IF THEY MEET ONGOING CRITERIA:
For example:
They get $500,000 now.
If their stock stays above $0.01 they'll get three tranche payments of $500,000 over two years.
No matter what... They pay interest and principal on the entire $1,000,000 until it's paid off...
BUT
If their stock drops below $0.01 they do not get any future payments AND THEY STILL MUST PAY PRINCIPAL AND INTEREST PAYMENTS ON THE ENTIRE $1,000,000 AS IF THEY HAD ACTUALLY RECEIVED THE WHOLE AMOUNT UP FRONT.
This is why it's called "death spiral financing" and it's why it was key that SFOR paid off what they could.
You see, the facility doesn't want cash payments... That's why they structure it in convertible notes.
Their cash payments are not accepted and in their stead, they accept shares.
Shares they now hold...and can short, and can use to match buy orders to keep the share price low so they don't ever ever ever have to pay out the remaining 3 $500,000 tranches.
Read the Press Releases for SFOR.
One facility refused to get paid off. They absolutely did not want to be paid off in full. They wanted their shares and their interest payments.
Insert smiley face here
AI
