Sino Agro Food Inc (fka SIAF)

[phoenike]

I think they might have changed their mind since below analysis was made some moneth ago. From what I understand after some iterations with TS they are now belive the shares has been sold. Below is their answer to me in December and I guess it was just a copy paste on whatever was shared with TS some months earlier.. Maybe TS can support clarify is my assumptions are correct.

Email from Dan and Solomon

1. Referring to your tables (shareholder guess as to shares held at OTC) above:

I think there are following adjustment and correction may be possible

l Nils Erik Sandberg shares should already be in OSLO = 421,372
l Part of our directors’ positions are held under 3 different
Nominee’s names in OSLO = 120,000
l Regarding the Collateral shares, we already announced as follows:
(i). Trade facility = 5,708,602
(ii) 4 individuals, collectively=2,736,833

Whereas, we believe that the Trade financier, if they have sold any
shares into the market, would only have sold at the time that the PPS
had stood at a substantially higher price, and even then, maybe 20%
or thereof, of the total shares held = 1,000,000

However, the 4 individuals are frequent Market traders, and, as such,
are possibly swing-trading their shares in the market. If this is the case,
then best guesstimate may translate into roughly 50% of their holdings
having found their way into the market = 1,500,000

All told, then the above numbers could reflect an adjustment of 3,041,372
shares needing to be made to the share count table you present.

As at 30.09.2017 the total I&O was 27,811,573 shares.
The 3,041,372 shares represents 10.93% free flow in the market, which,
itself, would represent a healthy number of shares to trade on OTC when
taking both the number of shares and the possibility of swing-trading
that some of the higher daily volumes we are seeing. Again, I must caution
you to take my best guess assumption as a likely probability; nothing that
can be completely substantiated without having more factual details.
In response to your assumption that unregistered shares are hitting the market,
Rule 144 does not allow restricted securities to be traded until all 144
provisions are met and proper legal opinions are in place to have applicable legends removed.
Transfer agents are strictly forbidden to release shares to the market (nor brokerage firms,
for that matter) until all issues are settled and in place.

2. Please find attached a market analysis of trading patterns that we completed for the time period between Oct. 2016 to Sept. 2017, which might help to explain, amongst other findings. why higher liquidity trading days seem to result in better market PPS performance than days wherein trading volumes are sparse to nil:

Attachments marked 2 to 5.

(We are in the process of updating the numbers to include Q4 2017, and will upload to the Company website, once completed).

Just to clarify, $26.7MM of the $36.8MM debt outstanding represents the total line of credit (“L/C”) value secured with our Trade Facility lender, which, to date, is secured with 5.7MM common shares of SIAF (non-voting/non-dividend rights) averaged at a value of $4.68/share, inclusive of top-up shares required to maintain the necessary securitized value against the L/C; still, though, representing a healthy margin in our favour when compared to the current market price at $1.92/share.
To reiterate what has already been previously disclosed by the Company in both its quarterly and annual reports, SIAF, on behalf of its China Trading Company partner (“Borrower”), provides security against the L/C in the form of SIAF common shares, with the burden of any cost associated with the L/C being borne by the Borrower. SIAF, for its part in this transaction, receives an 11% commission on any product sold by the Borrower on goods purchased/secured by the L/C.
Generally, with respect to the revolving nature of the L/C, there is, at any given time, approximately $20MM available to be drawn-down. Current draw against the line as of September 30, 2017 stands at $13.6MM.
The other portion of the Company’s $36.8MM debt outstanding ($10.1MM) are loans provided through four (4) individual private parties, who have been lending funds to the Company on a continuous (rotating) basis throughout past years.
The highest outstanding balance on these loans (combined) at any point in time had been at $12.6MM. Since having repaid $2.5MM of this debt, the Company has outstanding collateral with these lenders of 2.7MM common shares (non-voting/non-dividend rights) valued at $3.74/share; again, representing a healthy margin in our favour when compared to the current market price at $1.92/share.
I’m certainly not denying that anything is possible, since the security shares are held in the name of the Lender(s), yet with the average share price of the security shares hovering above the current market price of the Company under each of these arrangements, what, then, serves as their incentive to sell the shares when 1) the price they would sell them into the market sits far-below the value those shares represent as collateral, and 2) just as with our repayment of the $2.5MM against the third-party loan balance, why would they (or anyone in their position) assume the risk of having to pay a higher share price to retrieve those shares from the market in order to return them to the Company upon loan repayment?

It appears to me that your major concern is directed at the current market price, basing the reason for its consistent depression as one by misrepresenting our lenders as “boutique” financiers, whose method is simply to sell shares, drive down the share price, have more shares issued to cover the loan, all in the hope that the Company may never have the wherewithal to repay its loans, and thus never having the obligation to return collateral shares to the Company, i.e. toxic financing.

As previously mentioned, the Company has already tested this exercise by having repaid $2.5MM, with its share obligation to cover the remaining $10.1MM outstanding debt credited with the shares the Lenders had been required to return to the Company, thus decreasing the net total number of shares necessary to maintain collateral against the $10.1MM.

What I would like to present to you is an analysis of price action taking place over the past 12-months (October 2016 through September 2017) that provides a more plausible reason behind the depressing results of our share price, with the following observations being made:

l ref: Appendix (1). The general trade pattern formed during the 12-month period illustrates how the overall downward trend was primarily due to an almost non-existent support level generally required to withhold a marked drop in share-price.

l ref: Appendix (2). “Total trade dollar volume above $100,000 / day” (i.e. above average daily dollar volume, or “AADDV”). The AADDV trading sessions over the 12-month period resulted in a net drop of Seventy-two cents per share ($0.72/sh), consisting of 9.16 million shares traded (reflecting 60% of the period’s total share-volume traded) and $24.3 million in dollar volume (reflecting 68% of the period’s total dollar-volume traded).

l ref: Appendix (3). “Total trade dollar volume at >10% above AADDV, or >1.5 x the average daily traded share volume” (i.e. strong daily value / volume trading days, or “SDV/V”) The SDV/V trading sessions over the 12-month period resulted in a net drop of Seventy-nine cents per share ($0.79/sh), consisting of 7.36 million shares traded (reflecting 58% of the period’s total share-volume traded) and $19.1 million in dollar volume (reflecting 54% of the period’s total dollar-volume traded).

l ref: Appendix (4). “Total trade dollar volume below AADDV, or <1.5 x the average daily traded share volume, or <91% of the average monthly traded volume” (i.e. week daily value / volume trading days, or “WDV/V”) The WDV/V trading sessions over the 12-month period resulted in a net drop of Three dollars eighteen cents per share ($3.18/sh), consisting of 2.07 million shares traded (reflecting 16% of the period’s total share-volume traded) and $6.36 million in dollar volume (reflecting 18% of the period’s total dollar-volume traded).

The above analysis lends itself to the following conclusions:

A. Marked share price declines were the result of WDV/V market sessions, whereas modest share price decline and even price increases were evidenced and resultant from when AADDV market sessions, or better, had occurred.

In this respect, it is possible to assume that:

l Share prices likely will rise with strong liquidity, projecting that the stock’s share price will generally respond whenever trading volume exceeds 2 million shares per month;
l Shorting activity (i.e. percentage of overall trading volume) likely subsides when trading volumes exceed 2 million shares per month, since the trend has been for a price increase and/or a limited decrease in share price having occurred, and likely recurring, when volumes exceed this level.

B. The average daily trading volume throughout the 12-month period was about 48,000 shares per day, representing a 40% drop in trading volume on the OTC after the Company initiated its cross-listing onto the Merkur (Oslo) market. The split in the Company’s shareholder base provided more low volume days, providing short-position players intending to corner the stock, a prime opportunity to do so, as witnessed in the marked drop in share price occurring during WDV/V market sessions, combined.

C. Assumptions that high-volume trading days are the direct result of Trade (debt) financing, is refuted, its argument deflated, by the modest net share price decline having occurred throughout the 12-month period (i.e. having the majority of annual trading volume (54% to 60%) resulting in a net share price decline of only $0.72 to $0.79), compared to the total net share price decline, resulting from low-volume trading days (reflecting 16% of the period’s total trading volume), coming in at -$3.18/share. Thus, for trade (debt) financing to be labeled as the cause/effect of a large drop in share price, a high trade volume would have existed when the -$3.18 drop in share-price occurred, which was not the case as seen by low-trade volumes existing at the time of this precipitous price drop, instead.

D. In this light, the Company has already begun initiating steps to increase trading volume and will continue to do so over the coming months in conjunction with other announcements, soon to be made public.

l Again, anything is possible, yet to simply assume that your assumptions are what dictate the price action of the Company’s shares, regardless of the empirical data I just provided you, would be extremely short-sighted, and one that the Company would never presume is correct, especially when looking at all the reasons why selling shares under the circumstances described, does not work in any Lender’s favor.