SunWorks Inc (SUNWQ)

[accounting101]

TJS

I am all for a reverse split at some point, but I don't think pennyland is the time. We need volume now, and the decrease in shares outstanding would dry up some liquidity. The lack of liquidity could scare off investors and would create a much more jagged trading price swing. Once we move up and are a liquid in our own right, we can do a reverse split - maybe in conjunction with a move to a higher exchange.

A r/s would have no effect on acquisitions, share awards, or dilution. All of those things would adjust at the same ratio as the r/s. There would be no difference offering a company 10,000,000 shares @ .07 or 8,000,000 shares @ .0875. It is the same total acquisition price ($700k). Same thing with share award. If JN has 10,000,000 shares he can exchange for .07, after a split he would have 8,000,000 to exchange for .0875. Theoretically, the share price would be 25% higher after the split and the net effect would be zero. It's all just bookkeeping.

When the time came, I would be for a much more aggressive r/s on the range of 1/5. The long term case for a r/s is that stocks that have fewer shares outstanding perform better over time. It is the fundamental law of supply and demand. The more shares that can trade hands means they are less valuable (albeit not by much), even if all fundamentals are constant.