They filed with Delaware to amend their articles of incorporation to increase the A/S to 2.7B. This can be easily verified.
I have three theories about this:
a) they are lying through their teeth and O/S is really massive
b) they did this to shake loose some shares and keep the price down for their buyback (manipulation)
c) they need to maintain an A/S in excess of the total of O/S + shorted shares in case it they decide to (or are compelled to) settle with the shorts by issuing shares at some huge price.
OK, starting with (a), what on earth could they have done with this many shares? Starting from 722mm on 4/16, we are talking about another 2 BILLION. And if you look at the timing of the A/S increases, the average issue price would have to be very high. Let's just say 8 cents. Well, that would be $160mm. Is anyone seriously thinking they needed to raise $160mm from RM to fund their inventory and advertising? Does RM even have that kind of $$? This seems rather absurd to me.
Then there is (b). Sadly, I do not put it past this management to pull a trick like this on their shareholders. They have consistently overperformed AND over-tricked their investors IMHO.
Now, option (c) is very intriguing to me, but it is total guesswork on my part.
Wadi
