I think this question implies that shares could be created without any other change on the balance sheet, which is not the case.
I agree with the comment that shares are currency. Company doesn't get to just create shares out of thin air with nothing coming in against them. Also, a quick reminder that all of the people making these decisions have a legal exposure because of their fiduciary responsibility. This management team has given us no reason to think they are doing anything other than executing on the strategy laid out in the shareholder letter not too long ago.
But, here's how I'd answer your question with a couple of scenarios.
Dilution via Secondary
Let's say we're at 10 cents now and 250M shares outstanding and $25M market cap.
Surna raises an additional $25 million in cash through a secondary offering at 10 cents per share. Yes you've been diluted by half, but since the share price remains unchanged at 10 cents and the market cap has doubled to $50M, your position has lost zero value and now the company has $25M in new cash on the balance sheet to use for growing revenue, acquisitions, whatever.
Dilution via Acquisition
Let's say we're at 10 cents now and 250M shares outstanding and $25M market cap.
Surna buys 1 company for $25 million and pays in newly issued stock at 10 cents per share. Same numbers as above: you've been diluted by half but your share price remains unchanged at $0.10 even though the market cap has now doubled to $50M. Your position has lost zero value.
Reverse Split only
Let's say the company wants to get the share price above $1 to attract a certain type of investor and will execute a 10-to-1 reverse split.
You have 10,000 shares at 10 cents, market cap of $25M and 250M shares outstanding.
After the split you have 1,000 shares worth $1 dollar or 100 cents. The market cap is unchanged at $25M and there are now only 25M shares outstanding post-split.
These scenarios are a little ridiculous and are meant to be simple illustrations, but these same principles apply to either form of dilution or splitting.
As long as there is appetite for a secondary offering or that Management is able to acquire/partner at intelligent prices that are consistent with their fiduciary responsibility to create value to shareholders, nobody gets screwed.
I'd argue that we would screw ourselves by handcuffing management and preventing them from doing the very things they have identified for taking the company to the next level. In fact, If I was Tony McDonald and spent a lot of time and energy mapping out what it would take to get listed on Nasdaq and remain sustainably profitable and which companies Surna would need to acquire or revenue lines to build out to get there... and then shareholders who don't understand how dilution works voted to prevent me from doing so?? I would step down and take my talent elsewhere.
I'd like to hear what TM/management has to say about all of this. I certainly want to dig in and do the DD to make sure the pieces fit together and numbers make sense... but I would be shocked if this doesn't end up being something I support enthusiastically.
My 2 cents.
