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Ariel Way, Inc. Issues Letter to Shareholders
Washington, D.C., October 18, 2012
Dear Ariel Way Shareholders:
Yesterday, October 17, 2012, a press release was issued by the Securities and Exchange Commission (the “SEC”) stating that the SEC had charged Yorkville Advisors, LLC (“Yorkville”) and its founder and president and its chief financial officer with fraud. The SEC’s Enforcement Division filed a complaint with the U.S. District Court for the Southern District of New York charging Yorkville and the two executives with scheming to overvalue assets under management and exaggerate the reported returns of hedge funds they managed in order to hide losses and increase the fees collected from investors.
For various reasons, we have been unable to arrange financing for Ariel Way to complete potential acquisitions. Yorkville is a significant Shareholder in our Company and has been effectively controlling all our financings; both debt and equity, per an Investment Agreement dated February 28, 2006. Recently, we have tried to restructure Yorkville’s position in connection with a potential third party financing that would have provided working capital and acquisition financing. However, we were unable to come to an agreement with Yorkville and the potential investor elected not to proceed. Our independent financial advisors have indicated to us that it will be virtually impossible for Ariel Way to obtain external financing without a restructuring of Yorkville’s position on more favorable terms than they were willing to offer. Yorkville’s recent legal issues with the SEC add to the difficulty for us in finding new investors.
On October 12, 2012 the Seller of Government-Buys, Inc. (“GovBuys”) exercised his right per the Stock Purchase Agreement dated April 5, 2011 to repurchase GovBuys due to our inability to pay the first acquisition installment payment. Accordingly, GovBuys is no longer a subsidiary of Ariel Way.
Our Chief Financial Officer resigned on October 15, 2012 and today Leif Carlsson resigned as a Director on our Board of Directors.
Being the only person remaining with the Company, I will not be able to single-handedly rebuild and grow the Company. I will for the time being remain with the Company as the CEO and the sole member of the Board of Directors and will review and investigate, as appropriate, potential opportunities that may or may not develop for the Company over the near future.
I realize this is not the outcome anyone had hoped for, but perhaps there will be a chance for Ariel Way to move forward once the current uncertainty is resolved.
Very truly yours,
By: ____________________________
Arne Dunhem
Chief Executive Officer
AI
