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After the forward split in 2009, Kim knew he would eventually need to revert to a more typical share structure some day. Our share structure right now isn't normal for a biotech our size. If we organically waited until our share price was at $2, then our market cap would be $1.7 billion. A company shouldn't have to wait until it's worth $1.7 billion to be able to just "barely" make it onto the NASDAQ, which is what most here are asking for.
There are plenty of biotechs already on the NASDAQ that are smaller companies than Kraig Labs with no products and no revenues. They are doing R&D and hoping for their own breakthroughs too. In fact, currently there are 2702 individual companies listed on the NASDAQ. About 36% of them are worth less than Kraig Labs current market cap, and about 75% of them are worth less than the $1.7 Billion market cap some here think the company needs to be at before uplisting through NASDAQs "minimum" requirement of $2/share.
A reverse split would give us a more typical share structure for a biotech our size where outstanding shares are closer to 100 million, as apposed to 1 billion.
Also, just a side note: Kim can uplist at $2 a share. And no, it doesn't have to be for 90 days. But even for those who believe we need to organically get to $4 first before we uplist, ask yourself this: Do we really need to be worth $3.4 billion to be uplisted to the NASDAQ? That's bigger than 86% of their listed companies
<< After the boards first meeting 3 weeks ago, she didn't seem to be spooked by this uplist and offering. >>
That is a completely false statement.
The elected board members have not been seated yet, and won't be seated for another month or so (until after the reverse split)
And, board members with proven backgrounds is invaluable.
The reality is that the share price over the last 8 weeks since the conference call has been severely oversold and under valued. We are really just starting to get back to what our share price should have been. Even now it's severely under valued.
We were at $.34 before the conference call. The news that was revealed was all extremely positive. The platform silkworm is a game changer. The only issue was the delivery of the information. And we have been dealing with the damage of Kims delivery style for 8 weeks now. It's time to forget about it and let the actual scientific achievement be the focus.
The recent S-1 shows that about 150 million shares will be diluted and a reverse split of 30:1 or 40:1 will be coming soon.
Just so you are aware .. this stock did a 9 for 1 split a little over 10 years to generate more interest. The natural thing would be to basically back that out to uplist with a 1 for 10.
Some of those are hit pieces. Get used to them now. AVXL buy point was around 2.70. I think their science is sound. We should hope to see KBLB hit pieces like this, at much higher levels. AVXL looks toppy right now, but they are not a good example of a bad RS situation, and they aren't going to be.
Not that I can't think of some good examples of RS failures, but they simply do not have the holy grail of anything.
Oh, and as far as 100 shares going to $40 dollars, that is still waaay less than 40,000 shares going to $2...which for that 1000 shares to equal that...the PPS would have to go to $80 per share...I don't see that happening.
You are correct. Most brokers won't.
I couldn't have said it better myself.
What investors aren't allowed to trade on the OTC? Are you talking about corporations that choose not to? I am pretty sure that anyone can trade on the OTC/BB/Pink Sheets.
My mother used to say a 10% gain on one share of stock selling for 100$ a share is equal to a 10% gain on 100 shares of a stock selling at one dollar a share, capital investment is the same, the return is the same...$10.
Ok, so this is a growth strategy but it is not true that it isn't something to worry about. The press release speaks of KBLB having these loyal and faithful shareholders all this time and they are about to royally screw ever one of us.
There has been some discussion about the total amount of this financing deal. If all warrants are exercised, we could be looking at the company getting about $24 million.
Some think this is too much. I don't. I would love for all the warrants to be exercised.
But the new question becomes: What will they use this money for?
No doubt some will be used for building out the new facility, and even some earmarked for marketing. But the current facility in Quang Nam should be relatively inexpensive to operate.
As most of us have read, the sericulture industry in Southeast Asia is being hit hard right now due to the pandemic. Mulberry farmers are even burning their crops because they don't have access to silkworm eggs.
Also, there has been a lot of capital invested into sericulture manufacturing the past couple years. Vietnams new focus on reviving the sericulture industry has resulted in the building of sericulture manufacturing plants that can process thousands of tons of silkworm cocoons at full capacity.
So what do these new facilities do when they can't process the amounts of silk needed to cover costs? Unfortunately some of these silk manufactures could go belly-up.
So what's stoping Kraig Labs from using part of that $24 million (potentially) from purchasing one of these fully operational sericulture plants and retaining all of it's old staff? Kim could give the previous owners executive roles while also getting a nice payout without having to file for bankruptcy. It's a win-win.
A sericulture facility was just built in China for a little over $11 million. This facility can process about 4000 tons of cocoons a year. I'm willing to bet that same size facility would cost about half that price in Vietnam considering the average income in Vietnam is about 1/3 of that of chinas.
More and more I'm thinking this is why Kim is doing this financing deal now and for that amount. It would give us essentially instant large scale production and it would turn our competition (for mulberry) into stakeholders. This would be the only way to satisfy near and medium term demand for our spider silk. And it would fall within the $50 million phase 2 investment approval from the Vietnamese government
As far as a quiet period, I don't think so. The SEC will need to grant effectiveness to this prospectus before anything can be actionable anyways. But I've seen companies drop news in the interim to boost share price. In fact that's very common for other companies to increase the unit price.
When Moderna did their offering a couple weeks ago, it was on the heels of good (yet thin) clinical data. They got a lot of flak from it because a lot of people thought the data wasn't mature enough, but nonetheless, it helped their share price, and ensuing unit price.
The financing arrangement we have now is the same type that is done on many of the big board listings. The days of the CSC type financing (or worse) is over.
Doesn’t that also incentivize Maxim to sell the stock at a cheaper price which then increases the O/S more?
you're welcome.
So while this will be dilution it doesnt have to end up flooding the open market with shares to be sold right away.
because there is ($6m) SE but the offering only clears $10m as $1.5m is ‘juice’ for the investment bank.
Do the shares go out on the open market or are they sold behind the scenes to investors lined up?
Is this the way for the company to inform potential investors or is it required to inform current investors?
I really don’t believe $24 million is needed to accomplish full scale production in Vietnam.
This should get us to revenue quicker
This new capital is the security that the company has needed for years. No more $100k loans from Kim. No more "broke company".
Thanks for cherry picking my comment. Here is the full comment:
It will also likely be at a more shareholder friendly shareprice considering the shareprice is more than double than where it was last year in march 2019. This means it's less dilution than if it was done last year.
It's essentially just like our $1mm bridge financing deal that we did March 2019, except more than 10 times bigger. It will also likely be at a more shareholder friendly shareprice considering the shareprice is more than double than where it was last year in march 2019. This means it's less dilution than if it was done last year.
Also, it is with an established investment bank, rather than a Vietnamese entity.
Also, the $1mm last year was to keep operations going. This deal is for expansion and (according to Kims words at the ASM) much needed marketing. It should be enough to get us through to revenues.
$12.5 million of that is for warrants that are excercisable 6 months from now at their earliest.
So in other words, if they want those shares, the investment bank will need to cough up another $12.5 million to get them. That would give us $24 million in capital. I would be fine with that too!
With that type of capital, we would really look like a real biotech unquestionably deserving to be on the NASDAQ, so I say bring it. No more "broke company". This changes everything.
you are reading the wrong s-1
There will be great effort to downplay the significance of the cash, and focus on the dilution (which will likely be less than 5-10%). But in reality, this gives us all the capital we will ever need till revenues start flowing.
We have Financing!
This is what I've been waiting for.
$11.5 million is more than enough to see us through till profits. That cash will fund the companies build-out for the phase 2 larger campus in Vietnam.
I don't care if we give up 50-100m shares to get this done. It should be the last dilution needed, and secure much needed dollars to see this company through to profits.
Just the fact that a Private equity player is willing to cough up that much capital is a testament to this company's future.
Freaking finally, Kim! better late then never.
Exactly. It is not what was said. If it was, there would have been a much bigger discussion post CC. For me, I wrote it down when it happened so I know what was said.
Yes, I was. I was sitting in my car because I had left work early to listen to it. I probably had it on for a solid 15 minutes after the call ended while I was reading my notes.
I pulled the quote from my notes. There was nothing about if the shareholders "bought" anything.
Many people heard that interaction. If the word "bought" was ever used, it would have been a big issue with all of us at the time.
According to iHub historical prices, KBLB opened (for the 1st time) on October 8 2010 at 15.15 cents and closed that day at 16.2 cents.
So after almost 10 years, it is almost flat.
She is a rockstar who has been flying up the corporate ranks. I'm glad she's on the Kraig Labs team.
Our newly-elected and soon-to-be-formally-appointed Directors don't see a failing company.
Nice find, professor. There's a lot of opportunity in Vietnam right now for the right company to capitalize on the countries efforts to restore mulberry and silkworm production.
It seems like every couple weeks we see an Vietnamese article stressing how much they want to return to the hay-day of mulberry cultivation.
Why would the company not state this publicly as part of the explanation for the production issues we encountered?
He specifically said "cold weather" not pesticides.
For those that don't understand the use of the term "essentially pure spider silk", I will try to explain it as simply as possible:
First off, when a silkworm spins it's silk, there are multiple proteins at play. The silk fibroin itself is made up of at least three proteins(in this exercise we can leave out sericin because it is washed off and doesn't end up in the final silk product). These three proteins are essential for the structure of the silk.
The three proteins are heavy-chain fibroin (H-fib), light-chain fibroin (L-fib), and another small glycoprotein called P25. Now, quantitatively, these three proteins have a molar ratio of 6:6:1, respectively. So for every 6 molecules of H-fib, there are 6 molecules of L-fib, and one molecule of P25.
However, the molecular weight of these proteins differ greatly. In normal silk fibroin, the molecular weight of H-fib is ~390 kDa (kilodaltons, or Daltons, are a unit to measure atomic mass and molecular weight), L-fib is ~25 kDa, and P25 protein is ~30 kDa. This means that in normal silk fibroin, H-fib accounts for ~93%, L-fib is ~6%, and P25 is ~1%. Dr. Kane's job was to knock out the H-fib and replace it with spider silk protein. That is what he said he succeeded in doing during the webcast. It was also said that he was able to insert a protein that was 4 times larger than what had been previously disclosed in scientific literature.
If we were to assume that this new novel protein is 4 times the size of normal silkworm h-fib, then we can extrapolate (from the molar ratios and molecular weights) that the new silk fibroin is ~98% spider silk protein (replacing the H-fib), ~1.5% L-fib, and ~.5% P25. Dr. Kane probably understands that the silkworms need the L-Fib and P25 proteins to produce their silk and create a cocoon so it is useless to try and knock those proteins out, which is why they state it is "essentially pure spider silk". Without knowing the exact molecular weight of their new protein, I would say the new fiber is anywhere from 93-99% pure spider silk after the sericin is washed away (as is typical for silk reeling).
I hope this helps with the mass confusion on this board.
They don't have a choice. That is how Kim (the CEO) structured it. They can quit if they want. And maybe that is what Kim is banking on (so he doesn't have to pay out).
with the work being done by ken le and his group this week alongside commune officials in dien ban,duy xuyen and dai loc,this will go a long way in securing more land for mulberry and more farmers.
The ask on Level 2 was very thin all morning. I'm surprised it took this long to pop up. My guess is that the sellers have mostly sold what they wanted. Also, the vietnam news that sickzone posted gives a bright spot for reopining of prodigy which is great.