Why the selling. I dont want to get stuck holding the bag. What do these guys know that we don't.
Where is my analysis wrong:
32MM shares issued at formation. 21MM to management 10 - 11 million to some one else.
So the 10 - 11 MM shares issued at formation not to management i am going to assume was to Belomont partners/other consultants who executed the reverse merger and those share are going into the float as the basis is 0.
11 MM shares issued as additional paid in capital this must be seed cash investors
To understand the seed cash investors we must look at the aquisitions:
The company paid 17.5MM for Cattle division (10MM cash 7MM shares at 2.25 per share), heng sin (2mm cash 2mm shares at 2.25 per share), triway (1MM cash 1MM shares at 2.25 per share which was sold for cash of 5.75MM) and Live stock feed of cash only (4.5MM plus some future cash or stock payments of 3.5MM)
So the point is the other 10.8MM additional paid in capital shares must have gone to the people supplying the cash (seed investors) for the above aquisitions. I have no idea how much cash they supplied but it must have been in the millions otherwise how did the company get the funds to make the aquisitions detailed above. If we say they put 5MM in and recieved 10MM shares that is a basis of 50cents. Why would they be liquidating now at 50 cents. if it was 1MM dollars they would have a basis of 10 cents so maybe they are liquidating at a 40 cent profit. But then where did the company get all the cash to aquire the busnesses above. Point being if the seed investors are liquidating it is not at much of a profit given the hold period.
So this brings us to
21 MM share for management (which are tied up)
10 MM shares issued to consultants. (sellers at a 0 cost basis)
10.8 MM shares for additional paid in capital to other original/seed investors which might be moving into the float but not at much gain
10MM shares issued related to above aquisition at a 2.25 basis maybe their selling because the recieved sig. cash at point of sale and the shares were just gravey.
So in conclusion I can see the 10MN Belomnt / Consultant Shares being sold as the basis is zero but the concern is the Seed investors selling at a marginal return (if they are selling) and the people who received shares (2.25 basis) as additional compensation when they sold their businesses to saif selling at a signifigant loss (although it is only a paper loss if they viewed the siaf shares as throw in compensation).
The question to the board is two fold:
1)What am i missing
2) if the latter two groups are selling what do they know that we don't
it is hard for me to believe that this selling is just the 10MM consultant shares.
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