Southridge Enterprises Inc (SRGE)

[Sooah]

MAGNA NEWS - EXPEDITED UPLISTING AND $5MM POTENTIAL FINANCING

Magna will coordinate leading professional services and utilize established industry contacts to substantially reduce the timeline to complete the up-listing process. Magna has also has committed up to $5,000,000 in capital funding for the Company upon completion of the up-listing process.

Reading the press release and numbers involved, it is important to consider why the Company might need $5MM should it uplist to OTCBB.

The initial impression one forms from today's news is, "If SRGE is getting $500MM - $550MM for Cinco, why do they need to borrow $5MM?" This is a huge disconnect, yes.

To me, it looks like SRGE is planning to uplist prior to concluding the buyout/JV discussions, hence the expedited effort. As I have mentioned in the past, the financials must be cleaned up, specifically the assets pertaining to the old Ethanol business. What this entails is a write down of approximately $15MM in assets.

The impact of this write down is a direct charge in the same amount to shareholder equity (which is currently positive), which will send shareholder equity to the negative territory. Please understand this point. Minimum shareholder equity requirement for OTCBB uplisting is $5 million. Given that the Company currently may/may not have enough to cover the required $5 million minimum, it is imperative to have a back-up plan for additional capital injection if needed.

It is not to say that the Company will use or need the $5 million from Magna in this effort to uplist. To me, it seems to be a contingency plan.