Hello readers! Getting out a very quick reaction article on the SIRC shareholder update that was just released.
In the future, I think more of these shorter form type articles are better served as YouTube videos… but more to come there in a very soon to come blog update…
Key Points and Reactions
I’m going to rapid fire through my key points here and my reactions to them…
Calaway farms is getting moving which is cool – though it wasn’t clear (at least to me) whether this thing goes regardless of funding or not… So it may come down to funding still. Either way, 38m in revenue is a hefty chunk!
Financing – LOC
Oh boy financing… so the good news we heard was that they have a 10m LOC with a local bank that is supposed to be funded this week. Not to lay into these guys, but we’ve heard this before. So until this press releases, I won’t believe it. I’m sorry but we’ve been burned too many times in the past.
All of that being said, they think the 10m will go a long way and clear the logjam. So great if it happens, but I’m reserving maximum judgement until it does.
Speaking of being burned… ARBITER APPARENTLY IS STILL WORKING ON THAT 42M FUNDING??? WHAT IN THE WORLD?! (that’s exactly what I wrote in my notes).
I don’t care how likely they make it sound or how much time Arbiter has been spending on this, I put this at a solid 5% chance that it happens. Arbiter was apparently only being run and operated by Darin Pastor … just google his name and “lawsuit” by the way… but the bank was owned by someone else who now has someone else working the loan for SIRC??
The whole thing is so fishy… I’ll put this down as a lottery ticket event: I’m expecting literally nothing, but if it comes through it will be like winning the lottery. I sort of wish they would stop spending time on it.
Also, we did not hear anything about the 4.2m they loaned Arbiter that SIRC served a COLLECTION NOTICE on six months ago… So they still owe SIRC 4.2m presumably, but Arbiter is going to find a way to loan them 42m over a year later? Significantly doubt.
In my mind, that 4.2m is gone and the 42m loan is not happening. I hope I’m wrong.
The 14m in debt with Granite being converted at a huge share price premium of 3-4 dollars (I think that’s what he said) is huge. I have no idea why Granite would do that… but it is what it is. Again, I’ll believe that one when I see it in a filing, but huge if true.
SEC Compliance Dropout
I’ve talked about this a bit already, but I’m okay with them withdrawing from SEC compliance. Clearly SEC compliance did not help them get funding, so why bother spending the money on it. They need to clean everything up internally first… which leads me to
Dave presented three avenues for up listing:
Path 1 – Arbiter funding leads to significant direct reinvestment in working capital and in 1-2 years the company has grown exponentially. See above on Arbiter… there is a very low chance this happens. But this is actually my preferred approach minus banking on Arbiter.
Path 2 – SPAC. I’ve talked about this before, not a huge fan of a SPAC up list. They tend to cost shareholders and I just do see much of the benefit right now. It feels like faking your way into success without actually having sound footing. Also, SPAC sponsors take a big bite out of the company which costs shareholders.
Path 3 – Reverse merger. Similar to the SPAC approach, but I think it will be less costly for shareholders because they’ll be joining an actual company, not a SPAC. But it’s still a reverse merger, which can have funny business going on that could punish the shareholders of company merging in depending on how it’s structured.
So I hope they stick with Path 1 minus Arbiter and just work to make the current businesses work, then Path 2, then Path 3.
SING lawsuit being dropped is big and same with the FHP lawsuit being close to settlement… though I’ll reserve judgement until I see the terms. The employee dismissal lawsuit doesn’t bother me.
Overall I thought the update was okay but also kind of annoying… hence my tone in this article. It’s nice to see they’re still working through funding, though nothing being done yet still annoys me. This LOC NEEDS to be done… if it doesn’t get funded (or something similar) in the next four weeks, I think my faith in this company will be irreparably broken.
The Arbiter thing is just stupid, I almost wish they didn’t bring it up.
All in all, financing needs to get done. No more missed deadlines, no more deals falling through… I can’t take it anymore! I’m just sick of months going by and hearing about funding falling apart.
So while this was a helpful update, we didn’t really get any critical updates, nor did we get their 2022 un-audited annual report yet (EDIT – they’re out now, no patience from Mr. Aker!). Pretty annoyed and disappointed to be honest… these next three months are absolutely critical for shareholder trust. It definitely is for me.
On the bright side, there is some potential and this stock has been beating to smithereens… even Mr. Ranting here averaged down on Friday. So if there’s ever a time for someone with hope to buy, it’s now!
I’ll end there, sorry for the rants and thanks as always for reading!
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DISCLAIMER – AT THE TIME OF WRITING THIS ARTICLE I HAVE A LONG POSITION IN SIRC. THIS ARTICLE IS NOT FINANCIAL ADVICE AND IS INTENDED ONLY FOR EDUCATIONAL PURPOSES. I AM NOT A FINANCIAL ADVISOR. DO YOUR OWN RESEARCH.