Replies to post #29000 on Kraig Biocraft Laboratories Inc (KBLB)

[saintcalvus]

Sorry for getting on my soapbox at your expense btw. I think ZF had a good response to that question. I'll defer to him on that one.

[ZincFinger]

OK I'll grant that you have a fraction of an issue here and apologize if I misinterpreted your concern.

When a company has a secondary (the usual one time deal) There are two ways the broker can get compensated:

1) By commission: the broker immediately sells and puts on the market the shares it receives and gives the money to the company after deducting a commission.

2) by shares as a commission: the company immediately sells and puts on the market those shares that are not part of its commission and gives the money to the company.
Under this option the broker may be required to hold the shares received as commission for a period of time (to avoid flooding the market with shares. But not always.

What may be confusing ALL of us here is that the CSC agreement really appears to be a HYBRID of the two usual options:

Instead of a commission CSC receives a DISCOUNT in the price it pays KBLB for shares. THIS BLURS THE DISTINCTION BETWEEN A COMMISSION RECEIVED IN CASH AND ONE IN SHARES.

So you might have an argument for saying that CSC should have been obligated to hold an amount equivalent to its deduction/commission in shares for a period but certainly no argument IMHO for saying it should be required to hold ALL shares for a period. I'm not saying I agree with a contention that CSC should have been obligated to hold a fraction of the shares for a period but I grant that you could make an argument for it. However under the agreement CSC clearly is not obligated to do so. So you have to admit that, under the terms of the agreement KBLB is more similar to a loaner than to an investor but still, in actuality, a broker.

Even if your argument was considered valid (and I'm not at all sure that it is) your point would be limited to CSC not being required to hold a fraction of the shares (about 20%) for a period rather than being KBLB not being required to hold all of them. In that case you could say that KBLB didn't get the best deal. However, considering the marked benefits from the line of credit nature of the agreement which have clearly very markedly reduced dilution (to more than 80% LESS than the number of shares that would have been added to the market under a typical all-up-front deal) I think that the CSC agreement is still strongly overall positive for KBLB.

Could it have been even better? Maybe, but I'm quite satisfied with the way it is considering what the usual is and what the results of the usual would have been: more than 5 times as many shares put on the market.

I apologize for apparently originally misinterpreting the basis of your concern. But I continue to believe that you are looking at KBLB with a jaundiced eye. Perhaps both of us should try taking a few minutes pause to consider before responding to each others posts for awhile. I probably need to be more fair to you and IMHO you probably need to be more fair to KBLB. It is not reasonable to expect KBLB to come up with ideal solutions when none exists which IMHO is what some are apparently doing.