Merger Wrap-up
Well time to wrap this merger up and see where we stand.
First up, Hats off to Jim Palmer Trucking for borrowing 250k and wrapping it up in BK protection - priceless. Doesn't happen often that someone gets the best of Peacock. Maybe Peacock should have Derby check out the next candidate and do the DD first huh?
Now let's move right along and get into a little Peacock quotation:
"It was our intention from the time we first became involved with ActionView International to target the best possible acquisition candidate," commented Mr. Peacock. "During this process, we were presented with and conducted due diligence on a number of private companies that were seeking acquisition by a public company. While the disclosure of specific financial information for Jim Palmer Trucking will be part of the closing process, we can say that ActionView management is confident that Jim Palmer Trucking is a high quality company that we believe has a tremendous future operating in the public markets."
Synopsis
JPT was the best candidate Peacock had for a RM client. Future candidate will likely look less promising.
Where we stand
Well instead of cleaning up the shell we actually made it dirtier which means there is more work to be done. We went from 400k in debt to 600k in debt so we are now 50% worse off than we were before, but hey, what is a little money? What is the upside? Perhaps some of the Sequoia lawsuit money might find its way back but don't count on it.
The Problem
The problem right now is that there are 1 billion shares outstanding. Next up is the reverse split. The last thing anyone is going to want is to have this happening in the middle of a merger. This might happen this month and be put out of the way.
Why does the reverse split have to happen now? Quite simply you have to view it from the standpoint of method of operation. Javelin's selling point, differential advantage if you will, is the ability to fund during the merger process. The funding is provided by taking existing company debt on the books and converting it in the courtroom into 5 times the dollar value in shares. The problem is that the current share price does not provide substantial leverage. Remember that the last conversion was taken at prices below .0001. You can work out the math, 53k in debt for 740 million shares.
Sequoia is likely sitting with 200 million shares.
In Summary
1. Reverse Split has to happen before the next RM candidate is brought on board.
2. Share price has to be set at a more advantageous price level.
3. Sequoia is likely sitting with a gob of shares left over. Likely 200 million shares.
Derb's opinion
Yep, it is all my opinion. From a traders perspective, lower prices are likely ahead. The game plan has just been laid wide open. There is no magic. Yea I have heard it all before "You have no proof there is going to be an RS!" "You have no proof lower prices are advantageous!" "You have no proof that Sequoia has 200 million shares!" All I can say is "SAVE IT!"
Derb's Disclaimer
Derb holds no position and does not intend to take one either long or short. Posting is for educational and amusement purposes only.
Derb
AI
