InvestorsHub Logo
Followers 14
Posts 435
Boards Moderated 0
Alias Born 08/31/2014

Re: Bottles post# 5307

Friday, 06/10/2016 8:41:03 AM

Friday, June 10, 2016 8:41:03 AM

Post# of 8579
Bottles, I was fascinated by the dichotomy/binary outcome that you have for VHUB ("Either VHUB pulls a rabbit out of the hat or current shareholders suffer massive dilution"), and I'd like to walk through that second scenario with you.

Just for sh*ts and giggles, as they say, let's assume that the company will need $2 million to pay off current debt, provide additional working capital, and comply with FDA regulations. Let's then assume that they can issue stock (whether for toxic conversions or for new capital funds) at .005. If I have my decimal places correct, that would be 400 million shares added on to the 82 million or so shares currently issued.

Given that the company has been experiencing improved gross margins and given that lots of its competition will "go under" due to the FDA intervention, let me throw out a $1 million net income number, remembering that the $2 million in new capital will have extinguished all the existing debt.

Just to make the math simpler, let's divide that $1 million of net income among the rounded 500 million shares. The division comes out to earnings of $.002 per share. If we give the stock a price/earnings multiple of 20X, that would get the value of the stock up to 4 cents, which would represent a quintupling of the current .8 cent level.

And so my conclusion would be that the massive dilution scenario may not be as dreadful as one might first think. Of course, your "pull the rabbit out of a hat scenario" (which equates to my scenario of a Trump election creating a softening of the FDA stance) would yield a better outcome.

I'm still leaning towards the scenario of the company being sold being the most likely to actually transpire, but there's no reason for anyone to believe that any analysis or prognosis of mine has any validity (given my bullishness of the past number of months).