RS to Nasdaq - for all to read and understand (inside).
Lets assume PACV does a 500-1 RS to up list. I am going to use the extreme example of a 500 - 1 split to illustrate this point.
PACV's current OS count per OTC markets is 570,859,333, and the company is trading at a market cap of around $2,000,000.
Divide the OS (570,859,333) by 500 and you will get a post RS OS count of 1,141,719.
Follow me here... Pink sheet trader: John Rocket owned 10,000,000 shares pre-split. His shares were worth $58,000 at .0058 at the time of the split. After the split, John Rocket owns 20,000.
Okay, so... PACV is now trading on the NASDAQ exchange and its market cap is now a very conservative $30,000,000
$30,000,000 / post split OS of 1,141,719 = $26.27 pps
John Rocket's 20,000 shares x $26.27 pps are now worth $525,523. They were worth $58,000 pre-split. Is John happy now?
I used the most extreme split ratio (500-1) and the most conservative market cap (1 x revenue). Only a fool would believe PACV would trade at a market cap anywhere under 1 x its revenue, while trading on the Nasdaq at that.
To entertain the foolish though, let us explore another example: what if PACV traded at a mere $10,000,000 market cap on the Nasdaq, instead of trading at a market cap 1 x revenue ($30m)? How would John Rocket feel about that?
Well, John Rocket's 20,000 shares would be worth $175,174.50 in that scenario.
Yes, John would be happy!
Math:
$10,000,000 / 1,141,719 (OS) = $8.758 pps
20,000 shares x $8.75 = $175,174.50
In summary, 99% of reverse splits are bad IF we are talking about pink sheet stocks that:
+Are based on all hype and or have little-to-no revenue, preventing it from justifying a higher market cap
+Do not have institutional ownership
+Cannot up list to a higher exchange
+Do not have the means to expand and growth revenue / business
I hope this helps some. If it doesn't I do not know what else to say.
GLTU
