“Sorry - financing at a high cost for a period of time at the end of which the borrower will demand the money back from us.” Per HTRE.
Do you know the difference between a Lender and a Borrower? Apparently not.
Do you know the difference between a loan and a sale of securities?
The private placement financing that just closed via a Securities Purchase Agreement, was not a loan, no promissory notes were issued.
The 2 investors (Purchasers) purchased 1,000 Convertible Preferred Shares for $1000 per share and were issued warrants allowing them to purchase up to 750,000 shares of Common Stock in the future. The Purchasers paid a total of $1,000,000 for the Preferred Shares and Warrants.
The Purchasers can convert each Preferred Share into 1000 shares of common stock or they can convert all 1000 Preferred Shares into 1,000,000 shares of Common Stock at their request, without paying any additional money.
After six months, the Purchasers can also exercise the warrants and purchase up to 750,000 additional shares of Common Stock by paying Sigma an additional $1.47 per share, or another $1,102,500 in addition to the $1,000,000 already paid.
There are no promissory notes, so these payments are not loans that ever need to be paid back.
The Purchasers paid $1,000,000 and can convert the preferred shares into 1,000,000 shares of common stock, so their stock basis would be $1 per share.
The purchasers can also exercise the warrants in the future and purchase another 750,000 shares of common stock for $1.47 per share.
So in total, the Purchasers can end up with 1,750,000 shares of common stock after paying a total of $2,102,500, for an average cost basis of $1.20.
The Purchasers can make money by selling their shares of common stock for more than they paid for them. They have no right to demand any money back from Sigma, nor are they earning any interest.
They got a good deal, but that was because they bought in quantity ($1,000,000) from Sigma and not on the open market.
News 
Market Data 
Discover 
AI
