Replies to post #11762 on Sunset Island Group Inc (SIGO)

[WHIP THE HORSE]

Yes, they sold 400,000 shares and got $ 340,000 dollars.

Not bad at all/ It comes to 0.85 per share.

No more debt and $40,000 left for developing more land and growth.

Great deal IMO

[Alan Brochstein]

The company sold additional securities - it is incorrect to assume that they sold only common stock. They aren't giving the complete details:

Mr. Magallanes went on to say, "Today at opening of business, our company has approximately 4,031,771 share outstanding. At close of business today, our company will have approximately 4,431,771 shares outstanding or an increase of 400,000 shares. In exchange, at close of business today, the company will have placed into our hands $340,000 in expansion capital. The particulars of the S-1 and how it will work, how we execute the strategy, the long term preferred share conversion, etc. are all irrelevant at this point. Again, we ask that you trust that we are doing what is in the best interest of the company and shareholders. What we are telling you is that with the first tranche, 400,000 shares will be added to the outstanding and $340,000 will be placed into our account. On a side note, we do not like debt of any kind and throughout the expansion, for the life of our business, we want to keep debt completely off the books or at least to a minimum. We currently have $300,000 in debt and that will be paid off in full immediately. That will leave us with $40,000.00 in expansion capital from the first tranche. Each subsequent tranche will also be negotiated in 400,000 share increments and we expect similar or better results with each."

What we are telling you as clearly as possible is we have a unique and effective way to raise funds in place, a plan to keep the outstanding share count to a minimum, a way to create explosive revenue growth without the creation of any substantial debt, much less toxic debt

These words are carefully chosen - the company isn't just selling shares for $0.85. The 8-K yesterday detailed this quite clearly:

Q3. How do you explain to shareholders an S-1 Registration where shares can be bought for ten cents?

A. The answers to these three questions are closely linked. The company currently occupies approximately 22,000 square feet. The company has been offered up to 750,000 square feet by our existing landlord. For the first phase of expansion, we plan to lease a minimum of a combined 152,000 square feet, however the Company is still in discussions with the landlord about the entire 750,000 square feet. The Company has stated that it would be interested in the entire space only if we could access it in phases that matched our ability to distribute and sell the product. As far as the S-1 Registration is concerned, although the shares are set at a fixed price, the company is not obligated to sell all of the shares. If we did so, theoretically, $2,000,000 would be raised, but to expand to 750,000 square feet, that would require $8,000,000 to $10,000,000 in operating capital. Therefore, in order to maximize the use of the S-1, the initial investors who will be purchasing shares from the S-1 have agreed to invest additional capital in a designated class of preferred shares that will become a long term investment in the company with no voting rights, conversion rights and with restrictions. With that in mind, the number of shares that may be sold from the S-1 is yet to be determined. Regardless, the S-1 is in place for expansion only. How we manage that process is directly related to the square footage that will be secured as part of the expansion and the number of shares added to the outstanding.

These securities are likely convertible. Insiders will own effectively all of this company.