SNGX-- I have sold my entire position in SNGX. The announcement of the financing and the terms are not in the benefit of the company and I believe it will have a negative impact on the share price. From the 8K:
“The purchase price of the shares will be equal to eighty percent (80%) of the lowest daily volume weighted average price (VWAP) of the Common Stock for any trading day during the five consecutive trading days immediately following the date of the Company’s notice to the Investors requesting the purchase.”
So let’s say that the company instructs these financiers to buy shares. What they will do is look at the next 5 day period, find the LOWEST VWAP, and then get to buy at a 20% discount. So if the stock trades in a range from $1.50-$1.60 over a 5 day period, and the VWAP is $1.53, these financiers will be able to purchase their shares at $1.22. Once they own the shares, they just sell them into the market for a quick 20% profit. This is by far the most caustic form of financing and suggests to me the company was unable to secure alternative forms of financing at this time. The unexpected paid promotion and toxic financing has changed my thesis on this company and I have taken my losses.
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