BioRestorative Therapies Inc (BRTX)

[trader59]

They’re doing an offering of up to $23M of “units” consisting of 1 share of stock with 2 warrants. That is dilution by definition. Auctus appears to be going to take a lot of the offering in exchange for their convertible notes and warrants, appears they’re counting on better liquidity afterwards to make their money. I cannot tell how much of the offering capital Auctus is taking up front from the material available thus far, probably need to read it more thoroughly, may need to wait until the next revision. I do know that the full Auctus value (about $16M) can be taken in units, but the registration will have to cover them in order for them to be free trading.

The underwriter’s clients will make an offer for the units at a price depending on the total O/S at the time. They’ll expect a significant portion of the total equity in the company, so there’ll be a healthy RS. Those clients will make profit by selling the shares and the free trading warrants, so the PPS will immediately tank down to and below the offering price. The offering price will also be at a discount to the RS PPS, and probably a comparatively large discount, considering the recent exit from bankruptcy, the lack of real progress since that exit, and the price action on the stock. They’ll sell the share of stock for X$, the 2 warrants for Y$, and the sum will be their profit.

Holding through this process was a losing proposition for the 3 others I watched. If there is legitimate interest in the company (as opposed to a flip), there’ll be better buying opportunities later. Read the additional offering materials carefully to be sure they’re going to have the capital for the trials after Auctus gets their slice of the pie. A 4 month holding period is nothing if the flood gates are going to open up afterwards. Just remember what this has been and who really made out in the bankruptcy.