Not a prayer in hell that existing management would do a reverse split. If they intended to do so, they would have just added that to the Proxy. What they are asking for on the advice (poor?) of their M&A Counsel is the flexibility to not have to go back through the whole Proxy cycle if, for whatever reason, the agreed-upon Merger Partner would require it. I blame myself as the 5th largest holder for not being aware of this before they announced it. I had planned to get through the tax-loss selling season and then talk to management on getting the show on the road in January, but, unbeknownst to me they put the DEF14 out before year-end.
Since, I have talked this subject to the CEO, CFO, and Director Peter D who is the second-largest holder. I believe they now understand that there is no reason to use this. But, since it really is moot, I did not tell them to look silly by voting against their own measure so I assume they will vote for it. But I and a number of my large holder friends will give their own heads-up on the subject by voting against #5 on the proxy.
However, as long as they have the increased authorized and an omnibus preferred authorized, there is no deal no matter what size that can't be done without a reverse. If it is so big a company that it can't be covered by the new 250K authorized, then they can make up the difference with the Preferred.
But think about it. Let's say they do a deal with a bonified private company doing $50 million and netting $5 million. It's a 90-10 deal. there would be 210 million shares outstanding. But for all practical reasons, due to insider trading restrictions, there will only be some 9 to 11 million shares trading float out of a 210 million authorized against a stock that today is at .06 cents.
And I reiterate, This is the Cleanest Fully reporting merger "vehicle" from every imaginable aspect. Thit alone is worth 10% in stock to a interested company that is already profitable and doesn't need to through all the trouble and grief of doing a Brokered IPO.
