Copy of post from rrm_b4u:
Some thoughts... Let's look at it from an arbitrage POV. Post ONTV split you will receive ONE(1) share of ONTV for every 19.697 SSTY shares you own. Todays closing price of ONTV is .34 so .34/19.697 yields a current valuation of SSTY at 0.0173 per share. Todays close was .0018 or 9.4X times under valuation, or, assuming the current price of SSTY is valid, ONTV is only worth 0.036 cents per share. The market denies through arbitrage the 0.036 price for ONTV. The market is really saying that, in the absence of other valuations and more meaningful numbers, at least the prior market high of SSTY prior to the suspension (0.014) is where the arbitrage valuation of the stock dividend is currently being placed.
As SSTY returns to the pinks I expect a rapid return to those levels to test the market. If ONTV rises I expect the SSTY initial retirn to pinks price to rise as well.
Subsequent contract dollar numbers will alter both stock values based on their respective valuations thereafter. ONTV, with a float of only 50MM shares for the first year, will be a real mover. SSTY, with very little expense except G&A, will be a money machine for future M&A. Both should do exceptionally well IMO.
If a Fortune 500 company does attempt to buy them out, the exclusive license from SSTY to ONTV makes a hostile T.O. of ONTV a low probability. A right to cancel must be included in the license. The number of shares held by SSTY management is in effect a poison pill for SSTY hostile T.O. attempts. Any way you look at this, unless someone just flat steals the technology from SSTY, and then streals all the customers, and does it with goodwill in China, SSTY shareholders should do real well IMO.
Response from Johcee1:
Excellent post rrm, The question is what is keeping the price of ontv at .34 right now. Is it the existing investors holding on their shares because they see the potential of ssty, if that is the case then they are considering .34 a fair price for ontv and that ssty should be worth .017. Or are they holding their shares until the 30th when they get their spin off shares of ontv/s dividend. Once they receive their dividend, will they sell their ontv? That is a big question.
Another question is why would they not, if they beleive in the potential of ontv/tpid, be buying more shares of ssty now?
$1k invested in ssty at .002 gets you 500k shares plus 25k shares of ontv, a total of $9500 value including the restricted shares of ontv. If they only buy ontv and spend 1k, they only get 2941 shares of ontv. Of course the $9500 value includes the $8500 worth of ontv restricted shares providing that ontv holds it's shareprice, it only makes sense to buy more ssty instead of ontv.
In your example that ontv based on ssty's shareprice should only be worth .036, if you buy ssty you would still get 1k worth of ssty and 25k shares of ontv worth $900. So in either scenario you get more buying ssty.
The other factor that may come into play is ssty is still on the grey market, a higher risk stock than ontv which is trading in a higher market and fully reporting.
It will be interesting to see how this plays out after the 30th.
AI
