Replies to post #66713 on SK3 Group Inc. (SKTO)

[BoomBaby]

FANTASTIC!! Thx once again!

[eddymacc]

Thank you Sterling for being a true champion of this stock and doing some real DD for shareholders,it is greatly appreciated

[0001]

Nice DD Sterling!

[LAgirl33]

Thanks Sterling!! You are positive figure on this board!! I love your research and thanks for giving a glass half full perspective and showing that the news can not only be a godo thing for investors but very possibly AN AMAZING OUT OF THIS WORLD THING FOR MEDICAL GREENS SHAREHOLDERS!!!

[Jack_Ryan001]

Another excellent follow up to your previous, and already excellent, portrayal of what SKTO can do.

VERY GOOD INFO, even if this isn't what they're doing, Sterling is still taking a very careful, creative look into the company. Very dynamic management in place here, so anything could happen!

Thanks for sharing Sterling!

[janice shell]

FINRA told me that if this is what they are going to do, then the opening price of the subsidiary that’s being spun out will not be determined by the SEC as I had originally thought.

Gee, how surprising. Isn't that what we said?

And what does VDSC have to do with anything? They're spinning off a subsidiary, which is scarcely uncommon down in the pennies. Kind of like what CMKX did with CIM. How did that work out? Only it somehow never got round to becoming a public company, which is the usual outcome.

And again, IPOs are underwritten.

What SKTO says it wants to do is not the same, or even comparable. What did FINRA have to say to that?

If what VDSC plans IS a spinoff, then what SKTO plans is NOT. Do you understand that?

[Sooah]

FINRA told me that if this is what they are going to do, then the opening price of the subsidiary that’s being spun out will not be determined by the SEC as I had originally thought.

SEC does not determine opening price or pricing of any securities as it is out of their jurisdiction. Firms, upon consulting outside legal and finance professionals (highly advisable), have the discretion of setting firm value, hence the price/pricing of their securities. The market is the ultimate "speaker" in determining whether a firm's value is believable or not. Markets have operated in this manner for ages.

FINRA told me that the subsidiary (Medical Greens) would have to offer/execute a private share purchase transaction at a set price based on how much they believe that the subsidiary (Medical Greens) is valued to be worth through. This price is what would be where the price of the subsidiary (Medical Greens) would open up at.

What I find curious about your thoughts on this is that you seem to believe there is some great value in calling this a "Spin-Off/Spin-Off IPO" when I am not seeing any value. I will maintain my position that we have a reverse merger, not an IPO of any sort by any measure.

Yes, SKTO (notMedical Greens) can take advantage of Reg D which btw is a private offering, and if I had to guess, the most logical one here would be a 506 sale. I have eliminated 504 and 505 sales as options because that would shatter SKTO's credibility all together. Note that the idea of doing a 506 sale for the sole purpose of setting an opening price is unnecessary work for reasons I have provided above--firms have discretion to set their own price.

But's let's entertain the idea that MG will engage in a private placement. Do you realize the net proceeds must equal an enormously unbelievable number to yield a price per share of $1.77? If we're going with all of your assumptions and even opening price $0,59 per share post split, the private offering has to occur based on pre-split valuation which assumes SKTO's value at $1,77 per share.

Conservatively, I will use O/S of 500MM x 1,77 = $885 million for SKTO only. Now, if I were to allocate 1/3 of this to MG, that values MG at $295 million which is slightly below a factor of 8 against their unverified and unaudited financials.

The big question that comes to my mind is this then:

WHY ISN'T SKTO TRADING AT $1.77 NOW? Are you certain a private offering will bring in investors that are willing to pay $1.77 today to get in on this great 3:1 deal? Heck, if I believed your numbers or can find a remote reason to agree with your recent views on SKTO, I'd buy up the entire float at 2c! LOL.

As for the VDSC comparison, that is totally irrelevant. To say X is 492 times better Y based on math performed on the surface is a no, no. We have compare the fundamental values underlying what X has to offer vs. Y. I would ignore this VDSC comment in its entirety.

Nonetheless, every one is entitled to believe what they want.

Best to all,

[Sooah]

Sterling, hope all is well. I have re-read all of your thoughts and wanted to provide some additional comments back:

1. <Kind of like a Spin-off/Spin-off IPO> Thought
In theory, yes. I follow your thoughts that if the contemplated transaction were handled in several steps, it could look "like" a "spin-off IPO" and that if combined with a 506 sale, there is potential for SKTO shareholders to really optimize gains with the 3:1 split. However, only one aspect of your thought constitutes a quasi "spin-off" as in sum or totality of the transaction, it is not proper to call it a spin-off IPO. And, no, mergers and IPOs are not the same or even "basically" the same. They are given different names for a reason.

It seems you could have misinterpreted what FINRA told you as in real-life practice--not theory--"spin-offs" of wholly owned subs utilizing the 506 vehicle would not involve private offering of the sub's stock by the sub, but rather private offering of the sub's stock by the Parent. Hence, SKTO would be the party doing the private offering of MG's stock if they so chose to go this route. It is, nonetheless, a useless step if they were doing it for the sole purpose of arriving at a price to note on the S-1 registration. It is actually in the best interest of the company and shareholders to go directly to filing S-1 upon completion of the audit. There is very little merit in doing the 506 sale no matter how we look at this.

2. $0,59 / $1.77 per share thought
I hope you have reconsidered your 59c thought based on my comments about the figure requiring a $1.77 pre-split valuation.

If SKTO took the 506, MG needs to generate 59c pps from the offering. This number, to me, looks highly doubtful. Nonetheless, I would like to ask you what you believe is the fair number of units to be sold at a PP. In other words, how many units sold at 59c do you believe justifies valuation for MG, Inc. 1,000 units, 10,000 units, 1 million...etc.

Secondly, I would like to know what number of units of MG, Inc SKTO has to offer for sale at a 506 sale, and the basis of that assumption.

3. Changes in valuation from $5 to $1.77 per share
I sense a big disconnect here. If the plan of action set forth by SKTO management were taken at its face value, we are looking at some seriously good things coming for SKTO shareholders.

What is the justification for SKTO losing $3.23 per share from your initial valuation of $5 per share? This is a considerable hair-cut. Shouldn't the valuation improve instead of doing the opposite?

Why is the post split opening price of MG, Inc not $1.77 but $0,59 now?

Looking forward to receiving your comments,