IMPORTANT MESSAGE (UPDATE) ON IRONRIDGE TRANSACTION:
There have been a number of questions raised on this board since the Ironridge deal and a number of questions addressed to IR, the CEO, etc. in an attempt to reach clarity on the provisions/parameters of the deal.
I took it upon myself to introduce myself to Mr. Lee and some of the knowledgeable consultants on the Ironridge deal.
So as to make this synopsis as simple and understandable as possible (i.e. no rock has been left unturned) I am delineating the most important/pertinent aspects of this arrangement that will likely answer any conceivable question (or come as damn close as possible) that has been posed on this board, or to Mr. Lee, or to IR, etc.
The information provided was derived from back-and-forth conversations that do not specifically cite as to who said what, or by whom each piece of information had been verified. As to the validity of my statements, you’ll have to take what I provide as being as close to a filing as we might get.
Keep in mind that the points expressed in this summary are NOT statements or direct quotes from the CEO or others interviewed. They are a synopsis of what I have learned and believe are pertinent to the questions being raised.
Please be aware that the numerical order of these statements are neither chronological or by level of importance.
1) The $9,000,000 figure cited in the 13G reflects the amount of dollar volume that must be cumulatively traded before Ironridge is obligated to pay the first dollar to SIAF’s Creditors. Since the time of the Fair Hearing Settlement was reached, Ironridge has agreed to forego this provision and accelerate its commitment; sending its first payment to SIAF's Creditor(s) (the dollar amount was not disclosed, but was mentioned as having been substantial) long before $9M in trades have occurred. Some shareholders had been confused that the $9M was the amount of dollar volume that when reached would dictate the amount of shares issued to Ironridge. This is not the case; it only represents the amount to be traded before Ironridge would be obligated to begin dispensing payments to SIAF’s Creditors.
2) Ironridge has already received the 6,975,000 free trading shares, as stated in the 13G, and are free to hold or to sell them without constraint. The reason they are free trading is because shares distributed under a Fair Hearing settlement no longer are restricted under SEC Rule 144 (i.e. there is no 6-month restriction). Whatever amount of the 6.975M shares that have been sold in the interim, is unknown.
3) The 6,975,000 shares received by Ironridge is the MAXIMUM number of shares that they will receive UNLESS SIAF decides to increase its Outstanding Shares, which at the time of the Fair Hearing Case had been calculated to be 69,894,262 (this number includes the 7M convertible common shares in Solomon’s name). If SIAF were to increase their outstanding shares, then Ironridge would be eligible to receive 9.99% of whatever additional O/S is added, that is, if the PPS so warrants the issuance of additional shares based on the formula stipulated in the agreement (refer to the 13G for details on the VWAP formula).
SIAF is under NO OBLIGATION to Ironridge to increase its O/S, nor does Ironridge have any authority to require SIAF to increase its O/S. Also, SIAF does not have any intention to increase its O/S at this time.
Allow me to repeat this because this is extremely important: 6,975,000 is the MAXIMUM number of shares that Ironridge will receive as reimbursement in exchange for the $3,021,505.65 it is obligated to pay SIAF’s Creditors, unless SIAF decides to increase it’s O/S, which it currently has no intention of doing.
4) The 6,975,000 shares paid to Ironridge represents 9.99% of the 69,894,262 shares O/S at the time of settlement. I know that it’s more like 9.98%, but it’s the amount Ironridge was agreeable to and for all intents and purposes is close enough to 9.99%.
5) Based on the $3,021,505.65 being paid to SIAF’s Creditors and the 6,975,000 common shares received by Ironridge this would mean that Ironridge would have to sell all of its SIAF shares at or above an average of $0.433/share so as to breakeven or to make a profit on their transaction. Again, no one is aware whether Ironridge has sold any shares, or if they did, how many so as to determine if they are ahead of the game or currently under water. Again, remember that Ironridge IS NOT eligible to receive any additional shares unless SIAF decides to increase its O/S, which it currently has no plans of doing.
6) Now, the amount of shares Ironridge gets to keep (better put, does not have to return back to SIAF) is based on the VWAP formula (again, reference the 13G for details) at the TIME PAYMENT IS MADE TO SIAF’s CREDITOR(S). Let’s say Ironridge’s recent payment made to SIAF’s Creditor(s) was $1 Million. At the moment that payment was made, the portion of the 6,975,000 shares paid to Ironridge that WILL NOT have to be returned to SIAF is determined by plugging numbers into the VWAP formula on that date.
Ironridge has through the end of March, 2012 to meet its payment obligation to SIAF’s Creditors. Again, Ironridge is not obligated to make any payment to SIAF’s Creditors at all until $9 Million in dollar trading volume (beginning from Mid-November) has occurred, but as referenced earlier they have agreed to accelerate payments and have already disbursed the first tranche.
Both, SIAF and Ironridge, are jointly responsible for determining the number of shares, if any, Ironridge will have to return to SIAF, once the final payment from Ironridge to SIAF’s Creditor(s) has been made. It is at the time that Ironridge makes its final payment to SIAF’s Creditors that Ironridge is obligated to return shares to SIAF, if necessary; NOT beforehand.
7) So, essentially what we have is Ironridge who was given 6.975M free trading shares and is NOT ELIGIBLE to receive ONE ADDITIONAL SHARE unless SIAF decides to increase its O/S, which it has no intention of doing (think of it this way, “Why would the company retire an equal number of shares if it were planning on increasing the O/S, anyway?”), and who is obligated to pay SIAF’s Credtors $3,021,505.65 regardless of whether their position is under water or not based on the amount of proceeds they’ve accumulated through selling of shares and at what price, less those shares that they may be required to return to SIAF; potentially ending up paying more money to Creditors than receiving in return as a result of liquidating or holding the shares they have at their disposal.
8) Worse case scenario. Ironridge does not have to return any shares to SIAF. The market already has been or will be required to absorb whatever SIAF shares Ironridge wishes to liquidate.
9) Rays of Hope. There’s only 6.975 Million shares to absorb, and right now if Ironridge still holds any shares the shares would be technically under water, unless they had sold ALL of their shares at an average above $0.433/share. If they haven't sold ALL of their shares and are still holding some, then it's obviously in their best interest to see the PPS increase so as to improve their bottom line from the overall deal. Conversely, if they have sold all of their shares, then we no longer have to worry about the control Ironridge might hold over the market.
10) AGAIN, ALL STATEMENTS MADE IN THIS SYNOPSIS WERE FROM INFORMATION THAT I HAVE RECEIVED, RETRIEVED, ETC. FROM RELIABLE SOURCES. THERE IS NO ONE SOURCE WHO IS SOLELY RESPONSIBLE FOR ONE OR MORE STATEMENTS MADE IN THIS DOCUMENT. ALL INFORMATION HAD BEEN CORROBORATED BETWEEN ALL SUBJECTS INTERVIEWED. FINALLY, NO COMPENSATION WAS RECEIVED ON MY PART FOR COMPILING THIS INFORMATION. THIS WAS SIMPLY DONE IN RESPONSE TO THE CONFUSION THAT HAS BEEN SUROUNDING THIS ISSUE AND TO OBTAIN A POINT OF CLARITY. AGAIN, THESE STATEMENTS REPRESENT MY INTERPRETATION OF THE FACTS AS PRESENTED TO ME. DO NOT MISREAD THESE AS DIRECT STATEMENTS MADE BY SIAF OR ITS REPRESENTATIVES.
11) HAVE A SAFE AND HAPPY HOLIDAY