All dilutions shouldn't be misconstrued as some sort of sinister act being committed by said companies.
(Not to be redundant but the following needs to be stated)
It’s a requirement in order for shares to be made available on the stock market for investor’s purchases.
This is how companies raise capital for operations and growth.
Dilutions only becomes a bad thing when revenues generated from shares issued weren't used for reasons intended.
In penny land, one shouldn’t panic at the sight of what initially appears to be an enormous A/S or O/S.
There seems to be an overall lack of understanding when it comes to why the sizes of the A/S or O/S are as they read.
Especially here in sub-penny land.
Let’s do the math using real numbers from MGLG at www.pinksheets.com under “Company Info” Tab;
Estimated Market Cap
$4,682,451 as of May 21, 2009
Outstanding Shares
7,804,084,651 as of May 19, 2009
Authorized Shares
30,000,000,000 as of May 19, 2009
Float
2,792,229,863 as of May 19, 2009
Using the current PPS ASK “.0006” as at closing bell on 05/21/2009
The company has been Authorized 30 trillion Shares, (A/S), to its name.
This is the total available shares the company has at its disposal to be divvied for sale up in whatever way that best suits their needs to generate capital.
There is NO VALUE (No Market Cap) placed on those 30T shares. One can imply that they’re just products without a price tag stamped on them yet, Until;
-They are placed on the market (Made available) FOR purchase.
Whatever the quantity of shares that has been “released” or “Issued” into the market, becomes the Outstanding Shares, (O/S), now available for investor’s purchase.
The Price Per Share (PPS), at which they’re available for purchase yields the Estimated Capital Value in the Market. (Estimated Market Cap.)
Estimated Market Cap. = O/S x PPS = 7,804,084,651 x .0006 = $4,682,450.7906 ($4,682,451 truncated)
After in investors buy their positions, (Becoming then, shareholders.), the amount of shares left “FLOATing” for purchase, in this case, is 2,792,229,863 (as of May 19, 2009)
This calculates as to mean about 5,011,854,788 shares are being held by shareholders.
This was derived from;
O/S – Shares Held by Shareholders = Float.
Based on the O/S, only a total of about 26% of the company’s A/S can be owned by shareholders.
Of the 26% only 16% is currently in the hands of shareholders, leaving about 10% ownership “Floating” freely –Wink-Wink!
As for the concerns regarding the Sizes of the O/S? or Float?
More math;
First off, in pink penny land, especially sub penny land, the current sizes are relatively small.
Since about 2/3 of the O/S is already in the hands of shareholders, I’ll use the available “Float”.
Assuming that each investor would spend $12 on the current closing PPS @ .0006
$12 / .0006 = 20,000 shares
this translates to about 139611 investors.
Using the Max/Min block size purchases as of yesterday’s market, I found 2,000 to 8,000,000 blocks of shares were bought. Or $1.20 to $4,800, respectively.
This means the potential number or investors required to buy the 2,792,229,863 Float would likely be between , 1,396,114 to about 349.
Given the sizes of the market, that’s like a ton of aluminum foil to a ton of copper, respectively.
And also shows just how “Small” a trillion shares really is when viewed down here in the pinks, where thousands of shares can be owned from mere pocket change.
Well I hope this clears up things for many.
>6^}
Happy Trading!
