Tuesday, January 15, 2013 9:00:57 PM
"Any merger or acquisition completed by us can be expected to have a significant dilutive effect on the value of shares held by our current stockholders."
I would not be so interested but would hold anyway to see who was coming in as the new company may create buzz and a spike regardless. I love changes of control like this :)
But there's the possibility of reverse merger "magic" here. Reverse merger magic happens when a company comes in that's worth a lot more than the current market cap. Shares are given out to the new company. We do get diluted but only percentage wise, not financially. This is rare but it does happen especially when there is no reverse split involved with the merger, and I have seen no sign of that yet anywhere. As an example, say there's 125 million shares out now. The A/S is 500,000,000 and let's say the incoming company gets 150,000,000 so they'd have more than 50%. So there would be 275,000,000 outstanding and the current shareholders' percentage would be diluted. But what if a real company comes in that has a book value of, say, $20 million. 275,000,000 shares outstanding on a $20 million company would put the theoretical share value at .072. And if prospective investors think the new company's prospects are good they could bid up the stock from there to much higher levels. We've all seen stocks that trade at many multiples of their "book value." 2x would be .144, 3 x would .216 5x would be .45, etc. Worth the risk here, imo
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