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Re: Jim01 post# 2913

Sunday, 02/27/2011 6:56:37 PM

Sunday, February 27, 2011 6:56:37 PM

Post# of 37856
Jim01 - It would appear that the scenario you have presented is flawed because of your assumption that the A/S as well as the O/S would be reduced during the merger and subsequent R/S. The A/S is the authorized shares and from that a company can issue up to but not exceeding that amount of shares. If there was a simple 1 for 4 reverse split at time of the merger, the A/S would remain at what it is now, only the O/S (outstanding shares) would be initially reduced affecting the present issued shares. Since the A/S has not been affected the company could issue restricted shares to the merger company up to but not exceeding the A/S which is still at 1.5B. So now you have reduced the float to 375M in your example, but the O/S has been raised back to what the A/S was before the merger and Centaflix would have 1.125B restricted shares.

The company does have other options which would allow them to reduce both the present A/S and O/S since the NR stated that the final allotment would be determined at the time of the merger. The only thing we know for certain is that Centaflix will own 75% of the after merger outstanding shares, and existing QASP shareholders will own 25% of the after merger shares which will be the total float. As an example, the O/S could be set at 800M with present shareholders owning the float of 200M shares and Centaflix owning 600M of restricted shares. Now the A/S could be reduced to as low as 800M which would also be the after merger O/S in this example. In this example to affect a 800M O/s there would need to be a 1 for 7.5 shares reverse split.

Hope that helps,
Makamai

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