I think that we are on the same page...
As you know when a typical penny stock investor sees R/S, they have the initial reaction, that I had, which is f$%#*ng share swindlers!
That is the context under which I mention dilution in terms of the reaction people have. 10% isn't a bad number at all in my opinion. If having them on your team doesn't return you much more than 10% on your investment in them you might as well do it all yourself or settle for making a decent living in a small, mom and pop style business. The principals in NWGI are obviously shooting for much more than that. I would say that if they are talented and perform they are worth whatever value they bring. I used to have a mortgage business and if I had appreciated the telemarketers as much as the loan processors I probably wouldn't have had my business fail.
As I look at this situation I see a stock that has 75 odd million shares outstanding with the "public float" at about 20% or 15 million shares. a 1/10 reverse, which is incidentally exactly the middle of the range of possible splits, would leave us with 7.5 million shares or 1.5 million "public float". To go more than 1/10 would proportionally increase the share price but would put us below the 1.25 million share floor for a NASDAQ listing and hence be counterproductive. Plus, the market cap must be at least $45 million which is a somewhat heavy lift with 7 million shares outstanding. I am figuring this off of memory so if I am wrong please correct me.
The beauty of computer based businesses like this is that once you have your platform set, and your open for business the profit margin increases as the cost of the money you make decreases. Look at Craigslist. They have 50 employees and make untold millions. Matt Drudge is another. he has 2 employees. His cost of capital is almost nil and he brings in tens of millions of dollars while he sleeps. Gambling is a more dynamic endeavor but ultimately the end result is the same.
We are some of the few people anywhere that even know about this company. We are at the ground floor of something that just makes a lot of sense to me. Would I invest my whole retirement in this.....no. Have I bought a decent amount....yes. The foundation of my portfolio is Bank of America. I got in at about $6.50 or so because it just made sense to me. Now it's at $31 and I have no plans to sell. This company makes sense to me. One last thing, no matter how large the R/S the share structure will need to expand long term. With a 1 or 2 million share float the share price will be so erratic as to make it unattractive. Short term it is immaterial.
