Ceo1—there is no need to apologize to me. As far as I am concerned we were having a discussion about these 2 intertwined stocks and trying to figure out what really went on to help each other and those that read these boards.
What I think happened is that MFTH simply declared the cash value of the license agreement on the day it was signed as revenue in their 10-k. The License agreement says the SAFC are restricted so selling them would not have been possible. Technically they received $1.8 mil in value during the 4th quarter of 2012 for the right to sell their product even if none of it was cash and that is why the company never had any cash in the bank. It is part of the same deceptive reporting as telling us they were giving a 1 cent per share dividend (implied cash, not equivalent value) based on 550 mil shares back in October or November and then giving themselves another 100 mil shares before the ex-dividend date in April to keep more of the value themselves.
The rest of this post is a reply to your late night post last night that I was working on earlier but got pulled away from the computer and never got a chance to post. Sorry about the parts that are repeated or have already been addressed but I think there are important new things discussed and I would like other people’s thoughts—particularly ceo1’s. Plus I’m too lazy to edit this whole thing now.
Ceo1--I can't believe you replied that late last night. Sorry this post is so long but I am trying to clarify my understanding of the whole fiasco with a lot of detail.
I dug up the original license agreement on EDGAR a while back so I completely understand how the license agreement was set up. The contract valued the SAFC stock at a pps of .70 to get the $7 million dollar contract while the fair market value had a pps of .18. That is where the 4th qtr revenue of $1.8 mil came from with the future pps guarantees from SAFC accounting for the other $5.2 mil value of the contract. The only thing about your post I disagree with is that as I read the contract, the payment was 10 mil restricted shares of common stock so I don't think they could have dumped them into the open market. Plus MFTH claimed in their recent 8-k about the payment delay that the dividend was the same 10 mil shares of SAFC they received as payment for the license agreement in November.
Where my question comes in is that if I read the original contract correctly, SAFC did not guarantee the value of the contract itself but rather guaranteed the pps of the 10 mil share payment in the contract. The guarantee as I understand it was specifically that the pps of those 10 mil shares would be .70 or higher based on the average of the bid and ask prices at market close on at least one of the last 30 trading days prior to the 1 year anniversary of the contract or on one of the first 10 trading days after the 1 year anniversary of the contract. If MFTH gives the shares with the contractually guaranteed value out as their dividend, shouldn't the guarantee follow the shares?
More simply put avoiding the specifics of the contract, the only thing of value MFTH received in the license agreement was the shares worth .18 per share at the time the contract was executed but that are guaranteed by SAFC to be worth .70 per share in the future. If MFTH does not own the shares when the guarantee kicks in, they no longer own anything with a guaranteed value—the current owner of those shares would be the beneficiary of the guaranteed value. Let’s face it, the 2 principals still make out great as they probably own 60% of the MFTH shares if not more after giving themselves 100 mil shares since the license agreement was signed.
I wouldn't be surprised at all if this question of who owns the guarantee and how to enforce it once the shares are given away is what is holding up the dividend approval because otherwise the 8-k made it sound like the dividend was simply 10 mil shares of SAFC divided evenly among the 650 mil or so shares of MFTH. I guess the ability of MFTH to transfer restricted shares could be holding it up as well.
For anyone besides ceo1 reading this that might not be aware of the original dividend promise from MFTH, the shareholders were told they would receive a dividend of 1 cent per share when the contract with SAFC was completed. On a straight distribution of the 10 mil SAFC shares to MFTH shareholders it takes about .70 per share of SAFC to cover 1 cent per share of MFTH.
10/650=.01538 or approximately 3 shares of SAFC for every 200 shares of MFTH. 3x.7=2.1 2.1/200=.0105
AI
