Aisystems, Inc. (fka ASYI)

[Clutch Cargo]

I think I may have struck big-time pay-dirt!!!!!…

This post is dedicated to all the peeps who have been repeatedly asking: “who was buying all those big blocks that we were seeing on our L2’s several weeks ago?”.

The answer to that question sits openly in Section 1(b) of the GCS/MHD LOI, which states the following, in purposefully cryptic wording:

“Transaction Consideration . Based upon current and projected financials of GCS and other information provided by GCS and the GCS Shareholders, the Company’s understanding of GCS’s business, and the due diligence conducted to date, and assuming GCS continues to conduct business in the ordinary course prior to the Closing of the Acquisition and there is no meaningful change in its borrowing and distribution practices (other than the contemplated distribution to the GCS Shareholders prior to Closing) , the Company would be prepared to provide total aggregate transaction consideration in accordance with the terms and conditions of Schedule A, attached hereto.”

OK, 3 QUESTIONS: (1) What is a “distribution”?; and (2) why would such a “distribution” be made by some person or some company to the GCS shareholders?; and (3) why would such a “distribution” happen “PRIOR TO” the closing of the GCS/MKHD merger?

And even MORE interesting, the language of the LOI doesn’t say WHO or WHAT is going to be making that “distribution”. It could be william48, or littlebrother, or keetch, … or even ASYI, couldn’t it? Indeed, it even WARNS us that what we are reading is not the entire understanding of the document:

“As a condition of the Letter of Intent, both parties agreed to keep confidential certain terms and conditions of the pending transaction (specifically such as outlined in Schedule A and B of the Letter of Intent, and not released in this report) …”

“The foregoing disclosure is not intended to be complete and is qualified in its entirety by reference to the Agreement filed as Exhibit 10.1 to this report and incorporated herein by reference in response to this Item 1.01.”

QUESTION: Why the need for so much secrecy about all of the “undisclosed documents” involved in this deal IF the deal simply involves GCS and MHKD? The ANSWER is that the LOI is just a small part of a much bigger transaction that is NOT being disclosed because those portions of the transaction have not yet been signed (on purpose, so that they do have to be disclosed by an 8K).

But let’s stay with the question of exactly what might that “DISTRIBUTION” to the GCS shareholders BE:

We all now know that MKHD hasn’t made a dime from its operations since November of 2011, after it fled Japan and the Far East because it didn’t pay its Asian employees. Indeed, in December of 2011 it even lost its privilege to transact any further business in Nevada, its State of Incorporation, because it didn’t file $950.00 worth of required paperwork with the Secretary of State’s office. Therefore, “DISTRIBUTION” could not mean the transfer of any money to the GCS shareholders, because MKHD had no money (and still has no money). In every respect, it is … and has been … absolutely penniless. Indeed, it even stupidly attempted to publicly file its June 2012 SEC-related LOI documents without benefit of an attorney (see the very last two paragraphs of this post … or wait until you get there to do so).

“But Clutch, couldn’t the word “DISTRIBUTION” really mean a “distribution of the SHARES of MKHD to the GCS shareholders?” Not a chance in hell! Even War Machine has indicated (quite correctly, I might add) that trading in MKHD has been sparse to non-existent for a very extended period of time. Indeed, I’ve set forth his very wise words on the subject for you to read right here: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=78761344

And if, for some reason, you don’t believe both me and War Machine on this point, then take a very close look at the absolutely tepid trading volume that MKHD shares have experienced during the most recent 4-month period … here: http://finance.yahoo.com/q/hp?s=MKHD+Historical+Prices


So then … if that “DISTRIBUTION” to GCS doesn’t mean (1) money from MKHD or (2) the shares of MKHD … then what could be left that Beatty “distributed” to GCS … PRIOR to the actual “CLOSING” of the GCS/MKHD merger?

There’s only ONE answer, isn’t there: all of those multiple 9,000,000 and 99,000,000 (DAILY) share blocks were ASYI stock that was sold to the “GCS shareholders. Not only did Beatty “distribute” ASYI shares to GCS, but he went even further, in agreeing to the following:

“In addition, the total liability of the GCS Shareholders in connection with the transaction under the Stock Purchase Agreement and any other documents executed in connection therewith shall be limited to 25% of what was initially received by the GCS Shareholders under the Stock Purchase Agreement.”

This then very clearly says that if anything goes wrong with the merger, then the GCS shareholders get to keep 75% of the what they already received PRIOR to the deal closing!!! NO WONDER GCS IS NOT ANSWERING THE PHONE. THEY’RE TOO BUSY COUNTING THE WEALTH THAT BEATTY HAS ALREADY DISTRIBUTED TO THEM. GCS IS NOW HOLDING A TREASURE TROVE OF ASYI STOCK THAT THEY PURCHASED AT $0.0001/0.0002.


But it gets better than that … MUCH, MUCH BETTER THAN THAT!

Because the tight-lipped creeps at GCS were on the receiving end of that “distribution”, if means that they have now benefited from the ASYI/GCS/MKHD merger … PRE-CLOSING, and therefore MUST consummate that merger. In effect, there’s no turning back for them now. THEY ARE COMMITTED TO CLOSE THE DEAL! They can deny it until the cows come home; but the fact is that they have already received “PRE-CLOSING” CONSIDERATION (i.e., something of value). And they got it for $0.0001).

LOL! And who said that there’s a very thin line between criminality and brilliance! And poor Beatty, in order to protect his fat-pink-behind, had the good sense to add it to his public filings; however obscure he thought that it would be.*

Lastly (and humorously), it’s instructive to note that it was Beatty who drafted the LOI and not his very expensive law firm, Anslow & Jaclin, LLP, which is considered to be one of the country’s premier M&A firms. If you look at the lead-in to the LOI you will notice a VERY incredible error that he made. In his LOI, he stated as follows:

“ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On June 15, 2010, our Board of Directors approved the execution of a non-binding Letter of Intent to purchase one hundred (100%) percent of the ownership interest of Global Convergence Solutions (“GCS”), from its shareholders, in share exchange merger transaction.”

Do you see the error? Of course you do. The action by the BOD is deemed to have taken place two years in the past! Clearly, this was not the work of Beatty’s $750.00 per hour law firm. Indeed, if a partner or associate at the highly esteemed M&A law firm of Anslow & Jaclin, LLP were to have made such a GRIEVOUS error in a PUBLICLY FILED document … then he or she would have been water-boarded in order to discover the reason for their incompetence.

That incompetence was due to Beatty having run out of money and his having tried to create some of the filing documents on his own dime (a “cut & paste” from previous transactions no doubt).

THERE’S A ‘MORAL’ SOMEWHERE IN ALL OF THIS … and it can best be summed-up in Salman Ullah’s words on the Merus Capital ‘Real Software’ blog, where he says:

“Should you hire a banker? No, nine out of ten times you don’t need a banker. I think a good lawyer is far more important!”

http://blog.meruscap.com/

P.S.: The upshot to all of this is that Beatty’s actions with respect to that “distribution” will likely result in a very brilliantly PLANNED lock-down of ASYI’s publicly-traded float when the TRM is actually announced, as there will not be sufficient shares in the float to keep pace with accelerated demand. The net result will be a violent surge in the PPS of ASYI.

IMO (for those of you who still find meaning in those 3 letters).