Let us all review the terms of the Ironridge investment deal and go over the details so we know better what to expect.
From the Sept 25 PR,
CARSON CITY, Nev., Sept. 25, 2012 /PRNewswire/ -- Rapid Fire Marketing (Pink Sheets: RFMK) a developer, producer and distributor of vapor inhalers announced today that the Company has obtained its first institutional investments from Ironridge Consumer Co., a division of Ironridge Global IV Ltd. The first investment , which is nearly $700,000 , will enable Rapid Fire Marketing to settle accounts payable and significantly increase its inventory of vapor inhalers, expand its product line and business operations via a new division. Additionally, the costs of the Company getting to fully reporting status will be offset significantly via the Ironridge investment.
The second funding is a $1.5 million cash financing which will enable the Company to more than meet all financial obligations as well as expand its business on all fronts. The term of this deal is for 30 months whereby Rapid Fire Marketing will receive $50,000 in funding per month.
Thus we know that the Ironridge investment consisted of two main parts. The first investment was based on the usual equity financing that we PK investors have come to hate because of the dilution aspect. The second investment is based on debt financing ("cash"="debt") which basically means a recurring loan; a continuing line of credit. Think about it, Ironridge basically set out to help the company to have cash in order to become fully reporting (first) and to have the money to be able to purchase a large order of units to sell and then once operations are up and running on a certain level, operating cash will build and revenues will be coming in as well as expenditures, then (second) Ironridge will come in and give them $50k/month as debt financing in order to assist the business plan for growth, which I imagine will take off and so the company will be able to repay those cash loans each quarter until perhaps they do not need to make those loans anymore in which case the company is doing well and Ironridge still has a large stake in the company so they would make out on the capital investment they have in the company via the stock eventually. They want to see it grow and do well first before making cash loans though, this is certainly a reasonable approach to well finance a growing PK start up company; in fact, it is very rare that such a well established institutional investment firm would be so bullish on a PK company that they would go into such a bullish investment deal. They must really be confident in RFMK's business plan. The investment by Ironridge speaks for itself.
Now, we know that the second part of the investment deal is cash financing, not equity financing (dilution), therefore any further dilution of the O/S has nothing at all to do with the $50k/month in funding for the future. Let us look at the details of the first investment, which is equity financing.
http://www.otcmarkets.com/edgar/GetFilingHtml...ID=8829826
"On September 19, 2012, IV and the issuer settled $643,134 in accounts payable of the issuer now owned by IV, in exchange for shares of common stock of the issuer. Pursuant to an order approving stipulation for settlement of claims between IV and the issuer, IV is entitled to receive that number of shares with an aggregate value equal to the debt amount plus an 8% third-party agent fee, a 3% fee and reasonable attorney fees, divided by 70% of the following: the closing price of the issuer’s common stock on the date prior to entry of the order, not to exceed the arithmetic average of the individual daily volume weighted average prices of any five trading days during a period equal to that number of consecutive trading days following the date of initial receipt of shares required for the aggregate trading volume to exceed $2.5 million.
IV is prohibited from receiving any shares of common stock that would cause it to be deemed to beneficially own more than 9.99% of the issuer’s total outstanding shares at any one time . IV received an initial issuance of 143,500,000 shares , and may be required to return or be entitled to receive shares , based on the calculation summarized in the prior paragraph. For purposes of calculating the percent of class, the reporting persons have assumed that there were a total of 1,296,613,712 shares of common stock outstanding immediately prior to the issuance of shares to IV, such that the shares initially issued to IV would represent approximately 9.99% of the outstanding common stock after such issuance."
Now based on what is stated in the terms of the deal and the PR, we can attach the $700,000 amount to the monetary value of the equity investment. Now the difficult and complicated part is intrepreting the process to figure out how many shares equates to the full issuance of shares Ironride is entitled to receive. Basically, 70% of the average (volume-weighted) PPS for the five consecutive trading days after the initial issuance of 143M shares, was roughly 70% of about the 200 DMA, which is still $0.003, which is about $0.0021. Now, we must divide $700,000 by $0.0021, which is about 334M shares. They already received 144M shares in the first issuance, therefore based on the terms they would still be entitled to receive about 190M shares.
I cannot say definitively that the O/S has increased in the last few days by 30M shares; I will plan to contact the T/A myself on Monday to get the current share structure, I do not rely on bashers posts for up to date O/S figures. But just assuming that there was indeed an increase of 30M shares to the O/S then it would be further speculation to assume that it was Ironridge who received an additional 30M shares. It very well could be, but it would be a guess at this point. If they did receive those shares then I would expect we would see another Schedule 13G in the next few days; if I am not mistaken, firms have 10 days to file a 13G after acquiring shares, but not exactly sure. Another corollary to this is that in the terms it states the Ironridge can never exceed the 10% ownership threshold, therefore it they were the ones who received 30M shares and previously 144M shares represented about 10% ownership, then they must have sold about 24M shares since Sept 19 in order to kind of make room for these new shares. It is all guesswork and speculation on our part, we cannot be sure of anything, which is why having a real audited 10K filed with the SEC sooner rather than later is very beneficial for shareholders. Assuming 30M shares were issued to Ironridge, then that would mean that they are still entitled to about 160M shares (to shore up the first investment), thus the O/S could really never go much higher than 1.66B assuming the Ironridge investment is to be the last equity deal into which this company engages. Even if this future dilution occurs, that is only an increase of the O/S by about 10%, dilution of the current shareholder base by about 10% is rather meaningless when you consider everything that is going on with the fundamental growth picture for this company. All of the panic the bashers are trying to stir up on this alleged increase to the O/S is just silly. IMO!!! 
Hope this helps.
GLTA
$RFMK!
