I'd like to clear up any confusion regarding this convertible loan with Yorkville. There seems to be a ton of misinformation being spread whether it's misguided ignorance, or willful deceptiveness.
This is how the loan is structured:
• What Kraig labs gets: $5million cash (-8% management fee)
o This is split up in 4 tranches. (they rolled the Dec Loan into this one)
• The first one was in December for $1mil
• The second was March 26th for $500K
• The third was on April 6th for $500k
• The fourth was April 22nd for $3mil
• What Yorkville gets: $5mil worth of debentures ($1mil from December loan and $4mil from new loan). Yorkville also gets 2 tranches of warrants. The first one from the December loan (also called the December Debenture) for 3.125mil warrants at a strike price of $.16 and the second tranche of 8mil at a strike price of $.26 per share. So Yorkville has a couple options.
o OPTION #1: Yorkville simply sits on theses debentures. They have a 10% interest rate that accrues. After a year is up, Kraig labs can pay them back with the 10% interest and the deal is done. Yorkville will still have their ~11mil warrants that they can exercise if the price is above $.25 per share. They are obviously betting that they will or else their warrants were useless.
o OPTION #2: Yorkville converts this entire $5mil into shares. If they choose this option, KBLB will no longer owe Yorkville anything besides the prorated interest for however long Yorkville held the debentures for, and KBLB will keep the $5mil(-8% transaction fee). So what does this mean in terms of how many shares Yorkville receives?
• Yorkville will receive a 20% discount on shares depending on the share price from the previous 10 day trading period. This is similar to the deal that Calm Seas got back in the day.
• So Example #1: (Current situation)If the share price stayed around $.16 for 10 days, and Yorkville decided they wanted to convert their debentures, they would get their shares at roughly 12.8 cents instead of 16 cents. This would net them a little more than 39mil shares. THAT IS ALL THEY WOULD GET.
• Example #2: the share price rises after good news to $.50 per share and stays around there for 10 days. Yorkville decides to convert their debentures. They’ll get $5mil worth of shares at $.40 per share. That would net them 12.5mil shares. THAT IS ALL THEY WOULD GET.
• Example #3: The share price falls on terrible news of a Vietnam shut down. The price goes down to $.05 per share and stays their for about 10 days. Yorkville decides to convert their $5mil worth of debentures at $.04 per share. That would net them 125mil shares. THAT IS ALL THEY WOULD GET.
o OPTION #3: Yorkville does a combo of option 1 & 2 and converts some debentures and receives some loan payback after a year.
As you can see, Yorkville already gets about 11mil shares in warrants for the deal at strike prices of $.16 and $.25 per share. So if they want those shares, they’ll have to pay KBLB an additional $2.5 million to receive them.
Also, in regards to the 207 million “authorized” shares. Yorkville has every right to make sure there is enough authorized shares available in case things go south. They are, after all, dealing with a company on the OTC where companies that succeed are few and far between. This doesn’t mean they are being “issued”, so they are not part of the “outstanding” shares. It is meant as assurance to Yorkville if, for some reason, the share price tanks. It is also very standard for convertible debentures to request an authorized amount that is many multiples of what the current deal is likely to net. This is very simple to understand and I’m surprised how many fall for the misinformation.
Last note about the claims of KBLB rising debt; Guess what? the cash that they borrowed hits their books immediately. So it doesn’t raise their debt until they’ve spent it. So actually, this debt is currently hardly net negative (a couple hundred $K from transaction fee). Furthermore, if the debt is converted, then that debt goes away and our balance sheet goes to net positive from this loan. For instance, if Yorkshire converted all this debt to 40mil shares tomorrow (which is what it would be at the current share price), KBLB balance sheet would show about $4.5mil cash so if Kim still forgave his loan (like he said) we would be getting close to NASDAQ uplisting requirements (not to mention $2.5mil more cash from Yorkville warrants).
Thank you for listening to my TED talk
