Any number of things could "happen" when EXPH decides to do a reverse split, Hughes. The one thing that always happens is that the number of shares in the float (and sometimes the entire A/S count) are reduced by the announced exchange rate. If there are one million shares in the float worth $1 apiece and the company announces a 4/1 RS, post split there will be 250K shares in the float worth $4 apiece. There is no reduction in the overall value of the shares affected by the split. If you own $100 worth of shares prior to the split, you will own $100 worth (albeit fewer in number) worth of shares following it.
The problems come in when a scam does a reverse split for the single purpose of disguising an authorized share increase. Say a company has an A/S of one billion shares and 900 million of those shares have been sold and are currently worth 5 cents each. Because they have almost gone through their authorized share count and don't want their shareholders to get upset about another A/S increase (which would also likely trash the PPS at a rapid rate), they may pull a fast one like doing a reverse split in which only the shares owned, pledged and those in the float are affected, leaving the authorized but as yet unissued treasury shares not subject to the R/S. In the example given above, the company might authorize such a split of say 20 for 1 to come to a vote by proxy. If passed the 900M shares owned, pledged and in the float would then be decreased by a factor of 20 times to a mere 45 million shares. And the value of those shares would be raised by a factor of 20 from a nickel to a dollar apiece. BUT, the shares in the treasury would remain at a count of 100M and instead of representing a mere 10% of the A/S would now equal 69% of it and 222% of the shares subject to the split. In effect this would generate the equivalent of a pre-split 2 billion share A/S increase and would immediately reduce the value of your shares by a factor of around 2/3rds due to the potential dilution of the new much increased relative A/S in the treasury. Now that 2/3rds reduction would not happen immediately or even within a couple months as it requires a market to correct it. But as soon as it becomes clear the company intends to burn through the unadjusted elevated A/S at the same rate it burned through the old par adjusted one, the PPS will sink faster and faster until share valuations represent the true amount of potential shares that could end up in the float. In the above example one could expect those post split shares worth $1 to sink to between $.35 and $.40 cents probably within two quarters. And that might be a conservative time estimate.
The above example is just a sleazy way of tripling+ the A/S without saying they are tripling it and can help to stabilize the now higher share price for awhile while the company (usually) furiously dumps treasury shares to get their hands on more cash from converted and plundered shareholder equity to pay their salaries and perks and keep their gravy train in business before the PPS adjusts lower. There are probably a hundred different ways for a scam's management to sleaze and disguise their way to wringing more cash out of equity conversion by using stock splits, but the end result is always the same. Huge dilution and lower share value for the common shareholders. I have no doubt EXPH shareholders have an R/S in their future but probably not for another year or so. It depends on just how much dilution begins to affect the PPS. The lower the share price, the more exhorbitant the share volume necessary to raise the same amount of capital. After awhile, if there is no R/S these scams have a tendency to just collapse into themselves under the weight of the billions and billions of outstanding dilutionary shares. All IMHO.
SBB
