Seven Arts Entertainment Inc (SAPX)

[sbc357]

Excellent post there.
Now that the cards are on the table, let's start with the next hand:
I certainly think that those who see this RS as an insurance policy are correct in their thinking. Big question: Insurance against what? Everyone here has to figure out whether or not the executives of the company are concerned that they might not get $1 by Sept 20, or are they just following the rules to get the extension. I'd say odds at this time are 75 (Not get to $1) to 25 (just following rules to get extension).
Reasons I think that staying under $1 is the higher probability, and thus requiring a RS before Sept 20 (that will happen, of course when you least expect it - so remain VERY CAUTIOUS if you continue to trade this POS):
What concerns me most is that the this filing demonstrates once again that the dilution is ongoing and even more rampant than even I thought.

We have issued or agreed to issue convertible securities which would, if converted, require issuance of 16,363,636 shares of common stock which is more than the current authorized capital stock under our Amended Articles of Incorporation.

So this is over and above the surprising 30.8M shares OS that we just foiund out about in the 10Q. I was thinking before the 10Q that we would probably be at about 28M and was surprised to see 30.8M with another 3M+ immediately in the works as shown with this statement in the 10Q:

Additionally, the Company had the following aged debt acquired, which will be converted to equity, subsequent to December 31, 2012:


(1) $150,000 of aged debt was acquired on February 1, 2012 by Tripod for conversion at $0.225

(2) $200,000 of aged debt was acquired on February 3, 2012 by Michael Briskin for conversion at $0.225

(3) $400,000 of aged debt was acquired on February 7 2012, by Safron Capital for conversion at $0.225

and then the next biggie - another 15M shares ASAP)

Our Board of Directors is currently contemplating initiating a private offering, exempt from registration pursuant to the provisions of Regulation D, with one or a limited number of third-party, accredited investors. It is possible that we will have initiated and/or closed such a potential offering by the time of the Annual Meeting, although such a potential offering may not occur at all. The contemplated private offering (the “Potential New Offering”) may consist of shares of either common stock, convertible preferred stock (“Convertible Preferred Stock”), convertible debt (“Convertible Debt”), and/or warrants to purchase common stock, aggregating up to 15,000,000 shares of common stock, to a limited number of third-party, accredited investors (the “New Investors”), and a number of common stock purchase warrants (the “New Investor Warrants”) that would entitle the holders to purchase additional shares of our common stock. If initiated, the Potential New Offering will be made on terms deemed acceptable by our Board of Directors, which may include a Convertible Preferred Stock or Convertible Debt conversion price per share and a New Investor Warrant exercise price at below the greater of a share of our common stock’s book value or its market value at the time of issuance.

If stockholders do not authorize the Potential New Offering, it may not be initiated. If the Potential New Offering is initiated and does close, as to which there can be no assurance, the initial gross proceeds are estimated to be up to approximately $6,000,000, exclusive of any proceeds from any exercise of the New Investor Warrants. [Under the policy of NASDAQ Capital Markets (“NASDAQ CM”), the Potential New Offering must be closed within 90 days following stockholder approval or a subsequent approval of the stockholders may be deemed necessary by NASDAQ CM].

And THEN we get this:

Our Board is proposing for stockholder approval an amendment to our amended articles of incorporation to increase the number of authorized shares of capital stock from 50,000,000 shares to 250,000,000 shares.

Just so Peter can assure that the card game will continue ad nauseum.
Trade at your own risk, WITH CAUTION!