Renovate Neighborhoods Inc (RNVT)

[cwynn]

Reverse splits are fairly common and they're generally to the detriment of the existing shareholders.

In this case, what has happened is that for all intents and purposes the public shell of the beer company was merged into another company and that new company is the surviving entity.

This could not have been done without the tacit cooperation of the major stockholders, who may have simply been so far under the gun financially with the beer company that they just allowed it to occur and took what they could get to go away. Further, a "gracious parting gift" of the successors is often the former public company itself, which may well end up as a private company back in the hands of the founders.

It's hard to start up any kind of "significant capital required" business in the current new economy so experience tells me to follow the money and I'd wager that the Black Art was simply out of cash with no imminent prospects of getting some, plain and simple.

The option of the public shell divestiture may well have been the best thing that the beer company could have done for its investors, without seeing financials you never know, of course, but I think that it's a pretty good educated guess that this is what happened.

Perhaps the question that should be asked is that "is it better to have a tiny piece of something than a lot more of nothing?", and while this isn't an answer any shareholder likes, it appears to be the choice right now.