Deep Blue Marine (DPBE)

[jrf30]

Rusty's mate, you asked a question.

A reverse split is when the company changes the number of shares outstanding and the price of those shares by a specific stated ratio. They can do a reverse for any number they choose, and the resons they do it are myriad. Let me use an example. If it is a 1 for 5 reverse split, and the stock is trading at 2 cents per share, then an owner of 100 shares would own only 20 shares after the split, but the price would be adjusted to 10 cents per share the day the split took effect. You own only 1 share for each 5 old shares you used to own (Hence the 1 for 5 designation) but the price is adjusted by the inverse of that, which is 5 for 1. So, 2 cents becomes 10 cents.

IN theory, a split OR a reverse split doesn't add OR take away value from the investors. You own 100 shares at 2 cents or 20 shares at 10 cents. The total value of your stock remains the same. Either way it is $2.00 worth of stock. However, most of the time it becomes a negative event, both because people believe it to be negative and therefore sell the stock after a reverse, and also because others see it at 10 cents, think it is a better price than before, and sell. The negative implications are the bigger reason of the two. That means that a majority of the time a stock goes down shortly after a reverse split. Where it goes longer term is normally determined by the future events of the company, and not the reverse split.

A reverse MERGER is TOTALLY different. It sounds the same, but it's like a treasure company sayig htey found loot versus saying they found a foot. the words are similar, and only one letter is different, but they have NOTHING in common. ONe is positive, and the other doesn't bode well for whoever LOST that Foot! Anyway, a reverse merger has nothing to do with a reverse split.

Basically a reverse merger is when a company (COmpany A) buys a second company (Company B), but the second company is larger than the buying company. The SEC requires that it be considered a reverse merger, meaning company A is considered to be BOUGHT, not buying on future accounting reports. Yes, A still buys B, but the books have to show previous quarters and years from B, and also B remains the standing entity after the merger.

NOrmally when A buys B and B is larger, they do it as the reverse, to keep the SEC happy, then legally change the name of the remaining entity to reflect the name of A, so that the name doesn't remain as B.

Don't worry about reverse mergers. DPBM is not talking about one, and it is not something that needs worried about.
Reverse mergers only occur is the buying entity is smaller than the bought entity, and although DPBm is smaller than MOST entities, I don't know of anyone they want to buy right now.

Whereas merger splits tend to be treated negatively, reverse mergers can be good or bad, depeding on who is buying whom, and what price is paid. If the synergies of the merged entity are better than the two comapnies were themselves, then the stock oes up. If they have difficulty integrating the two together, it sometimes causes short term strife and the stock goes down. there is no pattern though that can be relied on beforehand.

DOn't let someone that probably doesn't even know what a reverse merger IS tell you that both are bad things, because they are not.

Back to the revers split, which is the only one DPBm might do. A reverse split CAN be a GOOD thing TOO. At times, a company will do a reverse split to get the price higher so that it can attract institutions, or to meet price requirements for an exchange (Like the AMEX or NASDAQ NM) or to just generate some excitement about the comapny. It also DOES lower the number of shares outstanding, which then makes the company more attractive if later they plan to sell shares in the open market. Not a lot of large players would buyu a company that already has half a BILLION shares outstanding. Too much dilution. SO, cutting that by a ratio of 5, to 100 million, would make future shares look better, and could incresae the value of the sahres we have.

Will DPBM do a reverse merger? Nope. Will they do a reverse split? Maybe. Wilf has said he wants to buy back shares from the treasure sales (Which would be in 2008. maybe even not until 2009! and NOT in 2007 for ANY of these shares from the treasure sales) and drop the float (Not outstanding) to 100 million. That would be about 150 million shares. If he does that, then the company will trade higher on its own, from the buying pressure (Just like it traded down by the selling pressure when he sold shares) and the reverse split would not be neccesary. So I think a reverse split is possible, but not known at this time.

Does that answer your question?