Posted On: 04/23/2014 1:10:40 PM
Post# of 36729
Budd: The real story is buried in SKTO merger-agreement schedules and exhibits. What has been posted at OTCM and Edgar SEC is essentially the whitewashed version. Common shareholders are denied inspection of items where crucial details of and exceptions to the merger agreement are locked away from view. This is standard M.O. for insiders of companies like these. Insiders remain detached by holding preferred shares and/or generous convertibles that insulate them from dilution and diminishing prices, respectively.
There are however clues in the agreement as to what lies in these invisible exhibits and schedules. Three examples:
1) "There is no injunction, order, judgment or decree imposed upon AEGY, or any of its officers or directors, or the assets of AEGY except as set forth on Exhibit 3.8." This implies AEGY principals may have some legal woes.There is no companion statement like this one applying to SKTO.
2) Schedule 2.9 would tell us details about outstanding instruments that entitle holders to receive common shares after 04/04/2014. This could be crucial in understanding the half-million dollar promotional campaign and subsequent dumping.
"All of the outstanding liabilities of SKTO at closing of the Merger shall be discharged or otherwise paid or resolved, and all options, warrants, conversion rights or privileges of SKTO which entitle the holder to receive shares of the stock of SKTO shall be cancelled or converted into common stock of SKTO prior to the closing of the merger, except as set forth to the contrary in a list of liabilities, options, warrants, conversion rights or privileges of SKTO which entitle the holder to receive shares of the stock of SKTO, to remain outstanding, due and payable included in Schedule 2.9 of this Agreement, as mutually agreed between SKTO and AEGY prior to Closing."
3) Schedule 4.2(a) would tell us how many shares SKTO can issue after 04/04/2014; this data would also be crucial in understanding and extrapolating share structure.
"Except as set forth above and as described in Schedule 4.2 (a), as of the date hereof, no shares of capital stock or other voting securities of SKTO are issued, reserved for issuance or outstanding and no additional shares of capital stock or other voting securities of SKTO shall be issued or become outstanding after the date of this Agreement."
4) Rights of preferred shareholders. Key data.
"The preferred stock of the Surviving Entity shall have the rights and preferences as set forth in the Statement of Rights and Preferences set forth on Exhibit 2.7."
There are however clues in the agreement as to what lies in these invisible exhibits and schedules. Three examples:
1) "There is no injunction, order, judgment or decree imposed upon AEGY, or any of its officers or directors, or the assets of AEGY except as set forth on Exhibit 3.8." This implies AEGY principals may have some legal woes.There is no companion statement like this one applying to SKTO.
2) Schedule 2.9 would tell us details about outstanding instruments that entitle holders to receive common shares after 04/04/2014. This could be crucial in understanding the half-million dollar promotional campaign and subsequent dumping.
"All of the outstanding liabilities of SKTO at closing of the Merger shall be discharged or otherwise paid or resolved, and all options, warrants, conversion rights or privileges of SKTO which entitle the holder to receive shares of the stock of SKTO shall be cancelled or converted into common stock of SKTO prior to the closing of the merger, except as set forth to the contrary in a list of liabilities, options, warrants, conversion rights or privileges of SKTO which entitle the holder to receive shares of the stock of SKTO, to remain outstanding, due and payable included in Schedule 2.9 of this Agreement, as mutually agreed between SKTO and AEGY prior to Closing."
3) Schedule 4.2(a) would tell us how many shares SKTO can issue after 04/04/2014; this data would also be crucial in understanding and extrapolating share structure.
"Except as set forth above and as described in Schedule 4.2 (a), as of the date hereof, no shares of capital stock or other voting securities of SKTO are issued, reserved for issuance or outstanding and no additional shares of capital stock or other voting securities of SKTO shall be issued or become outstanding after the date of this Agreement."
4) Rights of preferred shareholders. Key data.
"The preferred stock of the Surviving Entity shall have the rights and preferences as set forth in the Statement of Rights and Preferences set forth on Exhibit 2.7."
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