When people read that PPJ will be selling new shares to raise $5 million, the knee-jerk response to the news will be that this is a huge amount of dilution, and the stock price will completely crater.
However, investors should push past that knee-jerk response, and think carefully about the actual scenario.
PPJ Enterprise is worth roughly one million dollars today, and it is hugely underfunded for what the company needs to do to return to a healthy, profitable state.
Adding $5 million in funding to, according to the Form D filed with the SEC, "...TO REINVEST INTO SUBSIDIARY COMPANIES AND OTHER ACCOUNTING EXPENSES" will allow PPJ to immediately do what it needs to do in order to become a truly functional business again instead of being mostly a placemarker for a business while waiting on the results of a lawsuit.
It will also convert a $1 million corporation into a $6 million dollar corporation, and because the funds will be raised using restricted stock which will not sellable for at least one year, the increase in corporate value will come at ZERO DILUTION in share value for a one year period.
In fact, rather than suffering a crash in stock value, enjoying a 6X increase in corporate value should fairly be reflected by a corresponding 6X INCREASE in share price! If investors are wise enough to understand what is actually happening, in anticipation of the change in corporate value, yesterday's $0.0011 PPJE stock should become worth $0.0066 today!
The dilution from the $5 million in restricted (ie: un-tradeable) stock will kick in one year after the new shares are sold, NOT TODAY.
This gives PPJ one year to use the new funding in ways to generate new revenue to offset the dilution that will occur NEXT YEAR.
If PPJ fails to raise the desired funding, or if PPJ fails to capitalize well on the opportunity that the new funding brings, the market can easily adjust to that news with a corresponding modification in share price.
A typical alternative to what PPJ has chosen would have been to sell new shares to a toxic financier who would have dumped all of the new shares into the market as soon as possible for huge dilution immediately.
Instead, Chandana Basu actually made a wise choice, and found a way to raise badly needed funding, but delay the dilution to give the company a chance to grow into the larger share base, with revenue to justify it.
Today, shareholders should be pleased with a plan that will give PPJ an opportunity truly turn itself into a very profitable business! Smart investors will see this, and buy PPJE accordingly. Panic-prone investors will not see this, and will be crushed if they opt to sell en masse.
