LabStyle can only sell 4,370,485 shares. At .054 cents/share, this would only raise $236K. LabStyle can't ask new investors to pay more than the current price. Nope.
This puppy is going to get funded by the new owners and they are going to make a lot of money on this one. Roth had a plan on how they were going to take this company over even before LabStyle agreed to and signed the round 3 documents. But Roth also knows how they are going to fund this company now that they own 65% of it. At least the company won't die anytime soon.
I think some business professor should use LabStyle as the example in their textbook as what not to do! The title of the section could be, "Criminally Legal or What Not To Do With Your Business Startup". I like it!
This is interesting ...
"Of the aggregate Exchange Shares, 49,660,465 were issued as of August 22, 2014 and the Company has reserved an additional 4,370,485 Exchange Shares for potential future issuance due to contractual limitations on ownership as agreed to with a Buyer."
LabStyle is restricted from selling more shares. They can only sell 4.37M shares "due to contractual limitations on ownership". LabStyle anticipated needing only one more $4M round of funding before being profitable.
What I think this really means is Roth Capital investors, who now own 65% of this company, will be funding LabStyle from this point forward. There may not be another round of funding.
If you plug in Thursday's closing price of $.093/share instead of the .1217 price used above, and go through the calculations, you come up with 56M shares. That's 2M more than the 54M shares handed out today. But this is basically what happened to LabStyle.
I just tried again to download their app, but I think it's only downloadable in countries that LabStyle currently markets their product in, like in Italy, Germany, Israel, New Zealand, Australia, and the other 30+ European countries.
The FDA is expected to approve the Dario device for use in the USA by the end of 2014. Two of the three main parts, the test strips and lancets, have already been approved by the FDA, which should help in getting the overall Dario device allowed. Once the FDA approves the device, I would think the app would be made available in the USA.
If you read the user comments on The Dario Lounge group on Facebook, users love this app. Plus LabStyle uses the app to convert users to use their Dario device. I forget the exact numbers, but LabStyle gets over a 100 (it might be 1000) downloads per day of which I think 20% of these download users start to use the Dario product.
This company is a huge money maker if it can somehow get past the next round of financing. My impression was they only needed one more round of funding and this company is in profit mode.
I expect Roth Capital to somehow finance this company, if no other option is available. Otherwise even their investors, who caused the huge price drop and took over the company, will lose their money too. Sweet justice, in some sense, but highly unlikely.
Who walks away from a company that you own and can make you millions?
Sentiment: Strong Buy
27 million shares traded today. There's less than 23M shares for the entire company (before considering the dilution shares to be added soon).
Market cap is only 1.24M. This is all because of dilution clauses to raise $4M dollars in round 3. The previous round raised $10M at $2.50/share.
The company's revenue stream today is estimated to be $1.8M ($150K/mo), which is more than the market cap of the company. And this company is already expanding to cover more countries.
Ya, let's ask that question again! Why hasn't LabStyle announced it? Why doesn't LabStyle send out weekly press releases on all of the positive achievements going on? (I've even sent an email asking LabStyle why they don't send out more press releases in the past.) The answer is ... I don't know why! But it bugs me ...
Right now, LabStyle will likely be able to shutdown a competitor who is using the ear jack to connect their device. I think this company better buy out LabStyle before LabStyle discontinues their product due to a patent infrigement!
Roth Capital's share holders took over this company. Will there need to be another round of funding? Even Roth Capital doesn't take over companies to lose all of their money. Today LabStyle has 2,000 users which equates to $1.8 M revenue/year already.
I agree with sellmystock. Just pure stupidity.
That would be really good news for pre-round 3 investors. I don't fully understand how the numbers I provided would change to show this though. What would change?
Here's what I think will happen tomorrow.
Tuesday's price was .15, Wednesday's price .115, and today's price might end at .10. If you take the average price for these three days and multiply by 90%, you get:
.15 + .115 + .10 = .365 / 3 = .1217 x .90 = .1095
The purchase price is then divided by the above value to give:
4,186,677 / .1095 = 38,234,493 shares
Next, you subtract the shares already given to the round 3 buyers (initial purchase and round 1 dilution):
38,234,493 - 2,226,956 - 2,484,416 = 33,523,121 shares
Now lets add in the "original" warrants, which are being converted to shares at no cost to the round 3 investors. LabStyle won't make any money off of these warrants. The original price of the warrants is $2.35, but now they are being priced at $0.45 cents.
1,670,216 x (2.35 / .45) = 8,722,239 shares
Add the two shares together and the round 3 investors are getting 42M shares.
33,523,121 shares + 8,722,239 shares = 42,245,360 shares
Add these shares to the existing 23M float:
42,245,360 shares + 23,000,000 shares = 65,245,360 or 65M float.
Without the two rounds of dilution and the ability to sell the purchased shares, round 3 investors would have only received 3.8M shares instead of 42M shares.
2,226,956 shares = 1,670,216 warrants = 3,897,172 shares
Stated differently, round 3 investors will own 65% (42/65) of LabStyle instead of 16% (4/25).
If anyone sees any errors, feel free to post. I can be wrong!
P.S. What's the difference between, say, a .15 three day average and a .10 three day average, 15 million additional shares! Pennies count here.
Look at the latest SEC filing on Yahoo Finance or elsewhere from LabStyle. It was a 20 business day dilution period starting on August 18th. But on Monday, it was shortened to just 3 days (Tuesday-Thursday). As to how much dilution will occur, I don't know. I can't (nor do I think anyone else can) figure this out based on how poorly LabStyle wrote this calculation in words.
Here's the sentence about why Friday is being mentioned:
The “ Adjustment Price ” equals ninety percent (90%) of the lower of (i) the arithmetic average of the weighted average prices of the Common Stock during the three (3) Trading Days immediately following August 18, 2014, and (ii) the closing sale price of the Common Stock on August 21, 2014.
Hi, There's a takeover going on now where the 3rd round investors want to POUND the share price as LOW AS LOW CAN GO so that they can get millions of additional shares in return. This "game" is going on now. Officially started on Tuesday and ends on Thursday. But by Friday, ALL investors will only want the price to go up. There won't be any incentive for any of the share holders to sell at a loss. On Friday, I would think the price will not go down and is more than likely to go up. But how far up? Well, I can't tell ya. I would not expect the price to increase that much, but expect the price to either stay the same or go higher. With prices this low and that the company still needs to raise or obtain money by October, it's a very high risk/high reward "game".
Really, don't you have anything else to fabricate? Isn't this the 3rd time you've posted these misleading lines. You must work for the SEC because there's no backing up anything you're saying.
Why do this? You want the price lower than $0.15/share! ;-) Better buy today or tomorrow because by Friday, the dilution period ends and this fire sale ends with it.
What Roth Capital did is legal. But should it be legal? No way.
The SEC should not allow "investors" to sell their shares until after the dilution period has ended, not during the dilution period to force the price lower from $2/share to $0.16 as of today. How is this protecting all investors in a company?
This destroyed the investment of the Round 1 and Round 2 investors. Round 2 investors lost 93% of their investment. Is it their fault? No. Did they have any control over this matter? No. Does this abusive practice encourage others to invest in startup companies to make America stronger? No.
LabStyle's management blindly trusted Roth Capital to raise them money. LabStyle's management obviously are novices swimming in a shark tank, but that doesn't mean shrewd businessmen should be allowed to knowingly destroy their company either and say "Too bad for you."
With all of the SEC "rules", "regulations", and "disclosures" to protect investors, why have any rules at all if this practice is legal?
If you want to get a feel for how users like the Dario product, go to Facebook and search for The Dario Lounge.
The majority of comments are very positive with this device. But the Lounge is mostly a place to ask questions, suggest improvements, or ask about problems users run into with the meter or app.
But it's always nice to read the positive user comments have too, like:
"Very impressed so far with the meter ..."
"Thank goodness for my Dario."
"I am now proud to officially be a full part of the Dario Family."
"Love my Dario. Great bit of kit. My wife loves it too as she normally carries my bits and bobs when we go out. Dario has made things a great deal easier. Thank you."
These are some of the comments I found.
So why is this stock .15/share now? ;-)
Assuming I got the numbers right as reported, how can a company earn $350K in 2nd quarter on the soft launch of 3,000 users only be trading at $0.16/share?
I know there is a great incentive for the third round "investors" to LOWER DRIO's price as much as possible in the next three days. The dilution ends on Friday.
This company makes $1M/year revenue based on 1,100 users of it's Dario device and just reported revenue for the first time.
How many users are concerned about diabetes worldwide? In 2020, 50% of the US population alone will be concerned.
He's making it up in hopes of buying more shares. What? .16/share isn't cheap enough? I've already asked Micky99 for a link, but he hasn't provided it.
Before Roth Capital did the third round of funding, LabStyle had completed a $10M round of funding at $2.50/share and had a market cap of $57.5M.
After Roth Capital "helped" LabStyle raise $4.19M, today LabStyle's market cap (the total worth of the company) is $3.7M dollars.
How come no one is bashing Roth Capital for what they did to LabStyle Innovations? If LabStyle had simply kept working with Aegis Capital, LabStyle would be trading above $2.50/share today.
What's your source? The SEC is not going to investigate DRIO and suspend it.
After this "fire sale" ends this Thursday, the price will go back up. How far up is anyone's guess.