Kraig Biocraft Laboratories Inc (KBLB)

[GTman1]

and if kim has no news he wants to put out right away or holds off, whats to stop yorkville from dropping the pps to .05 and then converting all the rest of the debentures into about 80 mil shares which rise exponentially in value once kim starts releasing news again...

In short, because it's illegal. There are many statutes against it but the main one is due to FINRA's Regulation M. You can read a quick snippet of it at the below link.


Regulation M


It is also in the Prospectus because it would be during the 12 month restrictive period:

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the Selling Stockholders or any other person.

And secondly, it would be risky for them because they are only allowed to own up to 4.99% of the shares at a time. They would need to give Kraig Labs a 65 day notice to have more. So in your scenario they would excercise $1mil which would net them 8mil shares, bringing the total outstanding shares to around 860 mil, which means they would only be able to attain 35 mil more shares (utilizing a total of 2.75mil of their debentures. Then they would have to sit on their hands for 65 days and risk the share price going up in the time and having to pay much higher prices for their remaining $2.25 mil worth of debentures. So even if it was legal, it wouldn't be worth the risk.

And a last little note, thinly traded stocks can go up just as fast as they can fall. I'm not saying the share price would rise super fast, but them having to buy back in 8 mil shares could skyrocket the price and leave them screwed with their remaining debentures. Too many variables in that situation to know the outcome.