Replies to post #198187 on Kraig Biocraft Laboratories Inc (KBLB)

[DimesForShares]

I never said Thompson sold any shares.

If you are asking about the underwriting process, here is what I understand about the process.

Maxim will agree to buy, for example, $11 million in shares at a particular price, say 5 cents each. Maxim then finds buyers who want to purchase shares at 6 cents each. Those buyers pay Maxim.

This differs from Calm Seas because: 1) all the dilution takes place in a very short time; and 2) Calm Seas would offer their shares over the market.

The challenge that KBLB and Maxim have is: what price should the shares be exchanged at. Obviously if they set a price of 50 cents, Maxim would not be able to re-sell their shares and would not be able to sell until the share price rose to that price level and a little higher.

If the shares were priced at 11 cents (a small discount over the recent share price), buyers run the risk that KBLB's share price might continue to fall and do so quickly. The price might drop down to 10 cents, and once again this does not look like a good investment.

In a situation where the share price is rising, finding the right level is not as tricky.

Important caveat: this understanding may not be correct. An article from investopedia suggests that secondary public offerings typically drop the share price. In any case, I will welcome any corrections on how this process works.