Replies to post #74562 on Sigma Labs Inc (SASI)

[TedJ]

(Fixed my previous numbers).

Putting numbers to the Rights Offering.

1.5 million shares outstanding at $5 per share with market cap of $7.5 million.

Using your 75% discount, you would offer 1.5 million shares at $1.25 to current holders. Offering the 1.5 million shares will require the Auth Shares to be increased to about 4 million shares. So if the current AS increase is voted down, then there would need to be another Proxy and Special meeting scheduled to vote on the increase to 4 million.

Assume 100% participation and the company raises $1.875 million dollars minus expenses for the offering.

Based on a little reading about Rights Offering, it is typical that rights offerings drop the share price based on the Market cap increase and outstanding share increase.

Dividing the new market cap of $9.3 million by the new share count of 3.0 million yields a projected post-rights-exercise share price of $3.10 per share, down from $5 based on the heavy discount.

This is fine for the current shareholders who have the cash on hand to exercise their Rights and purchase the additional shares offered to them.

But if a shareholder owns 1000 shares and is offered an additional 1000 shares, they will need $1,250 in cash to buy the shares. If they don’t buy and their offered shares are bought by some one else either by bid or by oversubscription, then the other person makes out even better by getting even more discounted shares and the shareholder without the cash just sees the big drop in SP and is diluted further.