A look at the PP and what it means
posted on
Oct 17, 2011 11:29PM
Creator of award winning eers custom-fitted earphones
Well, lets get the negatives out of the way first.
1) 75 million new shares added to the float of 293 million, thats a 25% share dilution to existing shareholders.
2) Looks like the company needs cash right away, with it closing on Nov 14th.
3) No incentive warrant attached to make it attractive, might be hard to fill.
4)675k can be sold and added to the 75 million, if buyers can be found above the 75 million, AND AFTER the close of Nov 14th.
5) Extra fee,s that have to be paid to AIS, if they fill over approx 25% of the PP for us. Plus, maybe further dilution with the warrants that then will be attached to the finders fee.
6) The market and existing shareholders may not like and understand the PP, and sell some shares, because it may look as though things are gonna take a lot longer.
Don,t know if I missed any negatives, but, anyone feel free to offer up anything I may have missed.
Now for my positive sides of the possibly perceived negatives.
1) Hard to find a positive in this one, maybe only a bright side. That this may be the last dilution needed should it enable us to roll out enough product to start getting the revenues rolling in and CONVINCE an OEM that we are the real deal and can sell these things. To get the ball really rolling, sort of speak.
2) To close this on the close date fully placed would be an excellent acheivement. It will give us enough cash to roll out much more product than the initial launch. Our profit margin will be quite high on these units and that revenue could circle back in to the balance sheet, and back out for more new product to increase sales. Compounding sales to a degree.
3) Thats a toss up. Right now anyone could buy on the open market at that price and get the same thing. BUT, if an announcement of a deal or other contract were announced in the meantime, the sp could possibly rise, making the PP looking like a deal. And, as of now, there is only 1 million shares for sale at .06, so anyone really interested would not get what they wanted from the ask side at this time.
4) If the regular PP is filled, THEN we see an over subscribed situation arrive, then it should tell us that there is good interest in Sonomax. And this extra money can only further our advancement.
5)The fee,s are the cost of doing business, I don,t think we could have escaped this. You have to spend money, to make money.
6) The market and some disgruntled shareholders may sell on this news. That can,t be helped. I have a longer term horizon and beleive the rewards will eventually outweigh the risks, if we are not at that point now. A lot probably don,t understand whats going on here and the potential. If we can get the production levels up high enough, this will most likely be taken over for us by someone else, allowing us to operate off of small percentages of future sales. The potential here is enormous when you do the numbers for sales globally. Then you always have that possibility of a major deal popping up at the most unexpected time. Don,t forget all the cash the tech giants have laying around, and that they are constantly looking for NEW things for their company. What we have can be easily integrated into the Bluetooth and the like. I don,t know when in the future, but I see the Sonomax name on numerous everyday applications in the future.
IMO, comments welcome!