Some recent updates:
Last 8-K announced a 20 for 1 reverse split.
Also the authorized went up to 200 million shares which post split will be 10 million shares.
This should be the green flag indicating they are ready to up-list to NASDAQ/NYSE. Hopefully not and I doubt the NYSE-Market (AMEX) but we'll see.
It's also the quick way to get the pps way above the $1 minimum requirement. In this case and per the 8-K, $7 pps appears to be the target minimum.
Post split there should be 690,951 shares outstanding of which, 487,242 will be floating.
Currently fully diluted value is roughly .35 per share and book value is approx. $1.90 a share.
Post split book value should be around $38.00 pps.
But now looking at, IF the Series A are still convertible into 53,628,842 common shares, + the post r/s o/s of 690,591, that would give us a fully diluted value of approx. .54 pps. This is the number that makes everyone nervous but in all reality, it simply means insiders will still be locked in at approx. .35 pps. Common holders now need the pps to maintain between $6 - $7 to stay break even.
What we don't know is what they are doing with the preferred for the split. If they changed the structure, my DD here is oblivious. But so far I can't find anything in the filings pertaining to conditions to the preferred in the event of a split so, have to ASSume they will remain intact as is.
If there was ever a time for the company to release a PR, this would be it, BEFORE AUGUST. Though not many of us, the few shareholders there are deserve a little insight as to WTF is happening with the company... future plans, preferred share structure after the r/s, target acquisitions, some revenue guidance, etc.
All in all I'm good with the split. As long as we can maintain a $7 pps, no one loses.
Also w/o the split it would be almost impossible for the company to make any acquisitions without diluting the S/S to an unfeasible quantity.
So post split we're looking at close to 10 million commons to be used for what I would speculate acquisitions and an extremely tightly held float.
This way at lets say the low end of $7 pps, they can spend a million dollars per approx. 142k shares for acquisitions.
W/o the split and at the current pps, they would have to spend approx. 3.5 million shares per every million dollars for any acquisition deals.
This way it also keeps the fully diluted share count well under 100 million shares.
As far as long term outlook, $21.81 pps on a fully diluted basis would make the company worth just over $1.1 billion, what the Hidayatallah family sold their last publicly traded company for.
The objective is for them to make smart moves with the shares they will have for acquisitions to maximize revenues and profits while keeping dilution at a minimum.
Some might ask why can't they just blast the media to bring attention to the company. It's a good point but it will have its setbacks and make investing the money it takes to go say NASDAQ a much higher risk.
Bottom line is our investments should still maintain the same dollar value if the company continues to grow. 1,000,000 shares at $0.01 or 1 share at $10,000, it's all the same on the books.
