After a long weekend of review and debate, let me see if I can at least give you my perspective regarding comments/questions on R/S and A/S.
Why do they need to increase authorized shares?
Last 10Q this was the count on shares:
Authorized Shares = 400 million
Outstanding Shares = 325 million
Warrants = 40,206,617
Options = 58,625,246
Total O/S, warrants, and options = 423,831,863
Financing: up to $9.75 million
at minimum $0.12/share this yields maximum of 81,250,000 million shares
Total with maximum financing if at minimum $0.12/share = 505,081,863
Employee compensation program would add additional to this total.
As you can see, 600 million isn't unreasonable assuming they want margin for further financing if needed. Call it a rainy day fund that I hope they won't need. Hopefully, they can get revenue flowing, become profitable, and secure financing through more conventional means with lines of credit, loans, etc.
Why is a R/S of up 1 for 25 needed?
This is exactly what they say it is, only for uplisting. It's all about timing though. They are assuming, in my opinion, that for some reason the stock price doesn't rise quickly after announcements of contracts. We get stuck in penny land with major plays occurring.
Assume that they want to list on the Nasdaq with sufficient margin to be clear of entry point. Let's call it $5/share is the goal. In order to hit the $5/share goal after uplisting from R/S, they need a current share price of $0.20 (x 25 = $5).
If we continue down that path and assume that commercial agreements send us sailing beyond the previous high of $0.45, but the climb slows for some reason around $1 or less, then they can perform the R/S at 6:1 to 10:1 and get us above the $5 goal.
Assuming that they do a 6:1 R/S, the 424 million shares becomes 71 million shares and they have about 29 million available for financing and employee incentive plan.
Assuming that they do a 10:1 R/S, the 424 million shares becomes 42.4 million shares and they have about 57 million available for financing and employee incentive plan.
I think one of there scenarios is more likely what they have in mind and is more likely to occur. Contracts will get us moving up and we may hit $1 or more, but significant increase will require review of financial statements after a full quarter of revenue and a quarterly report. At this point, analyst will pick up the quarterly report and perform some net present value of future earnings and profits. This is when the real climb will occur, but may be slow or fast depending on profit margins, etc.
The additional climb could be delayed for up to 6-9 months assuming 1-2 months in 1st quarter with some revenue, a full 3 months in 2nd quarter with growing revenue, and then 10K 90 days later. It may be October 2017 before analyst get to take a look at a full quarter of earning and publish their buy/sell/hold recommendations and price targets. Do we want to wait 9 months to let the OTC players continue their power plays on our company that has revenue and is growing with minimal increase in new investors because the stock is still on the OTC?
I hope this helps.
