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Re: Southern Gal post# 44454

Saturday, 08/29/2015 2:27:00 PM

Saturday, August 29, 2015 2:27:00 PM

Post# of 74002
I can't give you company answers on this, but I can give you my thoughts. smile

<<Just to raise pocket change, relative to a company with a considerable monthly burn rate, won't they will have to issue tens if not hundreds of millions of discounted shares?

I should think that older private placement shareholders who paid perhaps $0.005 would be rather angry about new private placement shareholders paying $0.0025.
>>

If it were me in charge (And it is not) I'd do it this way. I wouldn't sell so much at this time. until the price goes back up again. I would find some other way to raise money. Maybe a short term loan with assets backing it, instead of stock at this time. Maybe a loan with a low rate but a bonus based on any treasure found. If not found, it costs the company a low rate, and if found there is enough to go around anyway. Gotta be creative. Something should work, other than selling while the stock is this low. Again, my opinion, and I don't know what he is going to do, but you are correct. To raise money would mean a LOT of shares for a small amount of money, so I'm sure he's thinking of some other way to raise money, and probably conserving shares too.

As for PP owners who bought at higher prices. Although none of us are happy with the price, I'm not mad that others are able to get a better deal. I'm just waiting for them to find treasure so that MY shares go back up. Why would I be mad at someone else for buying lower? "Might" even be convinced to BE one of those that buy at the lower price, if shares are offered. Who knows ...

The problem with the PP is that you have to hold for a minimum of 6 months before you can legally register the shares, then you have to go through a LOT of hoops to DO the registration. Then, you have to place them somewhere. My regular brokerage account will NOT accept the shares, even after the attorney writes a letter (At a cost) saying they are free trading and the transfer agent accepts that letter (At a cost). You then do a direct transfer to a brokerage (At a cost), but MOST brokerages will not accept the shares, due to the stock being a penny stock. SO you have to go to some private type broker, and they too charge money, to deposit the shares. Then you can sell, and the commissions? the one I am looking at right now charges 4.75% for commissions. If I sell 5 million shares at .005, for a total sale of $25,000, the commission is $1,187.50. At Etrade, if I sell 5,000,000 shares, my commission is only $7.95. Period. HUGE difference.

When you put it all together, buying the private shares IS a discount, but the RISK is higher, since you can't sell for 6 months, and the COSTS are MUCH higher. It takes away MOST of the advantage. SO why do it? Well, at higher prices I did it to HELP the company. They need to raise money. Everyone knows that. So if I can help them raise some money, by buying private shares, at what was then (And obviously is not now) a discount, that helps them. As for me? The discount helps a little at the time, but can disappear pretty quickly.

Right now if shares are offered at .0025, like you said (And you were just using a number - I know. Please NO ONE think that is a firm price, as I have NOT asked) I'd rather buy shares at .003 on the open market and have LIQUIDITY. Flexibility to do as I please. If things turn south, I can sell. If something pops it up, I can sell some and hold some, or sell all. WIth the PP, I can sell NONE in a hurry. Even after the 6 month hold, it takes over a MONTH to get the legal opinion, get the transfer agent to act, get the transfer in place and move the shares to a brokerage. Not for someone who wants to sell on news or in a hurry. So open market purchases have advantages over the PP. Plus I can sell all the shares I want for less than $10, not literally THOUSANDS of dollars.

Bottom line. Is it a good deal to buy the PP? Depends on one's situation. But, if one can do so, it DOES help the company, and helping the company that you are putting a large amount of money into is a PLUS. Will it end up with a lower price to buy PP shares? Yes, compared to what it is trading at during that time, but not by much, especially after all the hidden costs are taken into consideration. But if you have a core position you are going ot hold, plus trading shares, to buy some on a PP of a company you like helps the company, helps your investment, and gives you what amounts to a small discount. (I'm talking the PP here, not the past tense convertibles that have not been offered for a while.)

This is all OPINION. None of this post comes from the company. And I'm opening up here, on a category most people have never understood. I've been part of MANY private placements, as an investor, and so I'm using that experience to tell everyone how it really works. I'm explaining the PROCESS. Most of this is the same exact process for SFRX. So people don't think those who buy the PP are getting such a great deal or something special that hurts other shareholders. And those who bought at a HIGHER price, in previous months? I don't know ANY of them that are mad at anyone who buys at a lower price. NO one is happy the stock is so low. Not the PP buyers nor the open market buyers. Why would we be? But I"m still waiting for treasure, and ignoring the lawsuit posts, and waiting for what i hope (And truly think) WILL happen, which is the right areas are able to be searched, are searched, and treasure is found.

This is a post based on MY thoughts, MY experiences, and MY investing. I believe it will educate some on the Private Placement process, so I put it up. I will be disappointed if people tear it apart, as it is just for educational use for others on this board. Now I'm going to lunch at Pappadeaux. If you don't know what that is, you're missing a GREAT Crawfish Ettouffee! smile
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