Ironridge is a business that does this types of transactions to make profits. They have done many deals like these, at the end of the day it's about them making a profit for themselves. If anyone is interested in seeing the trend of Ironridge and the many other deals that they've done go to the following SEC link that shows all the S13G they have filed. http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001512103&owner=exclude&count=100
I'm not saying that I agree with their business strategies, but at the end of the day I'm glad that APT is doing away from them. At the time that APT took this loan, they weren't a public traded company hence they couldn't swap for common stocks, therefore instead they gave Ironridge collateral in forms of assigning their receivables. It is such a relieve that APT is ending that and taking back control of their own receivables.
The assignment of the receivables is a "factoring financing" of receivables deal, you can google what those are.
Everyone needs to comprehend that for any growing company, the hardest hurdle to overcome is cash flow. Cash flow in the sense that APT needs to float the terms they extend to their clients, especially those big box stores, they demand from 30-90 day terms. Meaning APT needs to be able to float their books to suffice the orders and be able to suck up the fact that they don't get paid for the term until that invoice is due yet meanwhile the clients can still continue to place orders. APT had a growing demand for their products and orders keep coming in, but how do they come up with the cash flow to order the parts to suffice these orders while the client doesn't pay until the invoice is due. And it's likely overseas manufacturers, APT's vendor's demand COD.
I'm typing on phone, so I'm ending it here. The rest you can figure it out with your own DD.
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