Freeze Tag Inc (FRZT)

[wallstreet1231]

When a company files for a reverse split, a split that only applies to issued and outstanding shares - ie does not apply to authorized but unallocated (shares that aren't issued) it potentially provides an opportunity for the company to buyback issued shares and put them in the unallocated category. If FRZT were to do this they would gain 100x immediately on the shares they purchase pre split upon completion of the split.

To mitigate this concern, which I believe would be dubious in intent, wording such as this is stipulated in the 14c:


"The reverse stock split is not being proposed in response to any effort of which we are aware to accumulate our shares of Common Stock or obtain control of the Company, nor is it a plan by management to recommend a series of similar actions to our Board or our shareholders."

I doubt FRZT is acquiring shares. If the reverse split were to be cancelled then they would have little to no motivation to buy back shares.

My opinions as always.