If they believe that it is prudent to increase the authorized number of shares of Common Stock in order to maintain a reserve of shares available for immediate issuance to meet business needs, such as an acquisition or equity offering, promptly as they arise, then it makes sense.
That need to maintain a certain amount of control is very important.
Maintaining such a reserve will save time and money in responding to future events requiring the issuance of additional shares of Common Stock, such as acquisitions or equity offerings. In addition, the increase in the number of authorized shares of Common Stock will allow them to continue providing equity incentives to their employees, officers and directors.
This is a standard business move, and IMO the other avenues were exhausted. Meaning, becuase the stock was at .01, etc it would take 10 grand to buyback 1 million. So, thats not an option. Next choice is to tank it to all hell and back to reach an affordable area, such as .0010, then buyback.
The 3rd is the AS increase, 2 birds with one stone theory. Not the best, and not the worst. So, middle ground.
Then the 2nd part comes, once its done, restricted, unrestricted, etc.
All speculation, because it matters 100% how they apply the $ and shares to whatever. If and I mean if, all monies from the A/S go towards increasing company infastructure and marketing awareness, then were good to go.
The company has one shot at this, and I'm sure they know it. They wont be able to repeat this action in the future, at least to keep the base they have. The customer base increases are vital to every plan, with the forecasting models are in full swing I'm sure.
This piece of data, we as shareholders lack. But the company sees it everyday and are able to adjust fire to surge or back off in certain areas.
Long reply to the questions, but I hope this helps.
