Replies to post #190391 on Kraig Biocraft Laboratories Inc (KBLB)

[DimesForShares]

"Still don’t think see how that route destroys value for existing shareholders though, as long as the market cap keeps rising as the company progresses."

Here is the scenario. Currently we have share price of .1569 and 844.5 million shares and a market cap of $132.5 million. Thompson issues a 40-1 reverse split. At the opening bell, the share price after the reverse split is up by 40x to $6.276 each, but the number of shares is down to 21.1 million. No change in market cap.

Thompson issues 3 million more shares to fund operations. Investors are unhappy about the reverse split and about the dilution, and the share price drops from $6 down to $2. The market cap falls from $132 million down to $48.2 million.

The market cap falls when the share price declines. The share price declines because investors are no happy about the reverse split and new dilution.

Part of the trick of KBLB is that its current market cap is not based on fundamentals of sales and earnings, but instead is based on potential. As it transitions from an R&D company to a production company, its market cap will shift from a potential basis to a production basis. As we have no easy way to estimate production or sales at this moment, there is no easy way to estimate the market cap in the 'new normal.'

Note: I am not saying anything that has been described will happen. This was mojo's argument and I think it is an interesting scenario to ponder. I believe the reverse split will prove a dangerous move by KBLB for current investors. Others don't. I hope we never have a cance to find out who is right.