Greenshift Corporation (GERS)

[fourtwo]

Not quite right either. Please pay attention all:
1) After a R/S you do indeed have the same amount of stock in dollar terms as before - 10 shares @ $1 versus 1 share @ $10.
2) All things being equal the stock would stay at the new valuation - no shareholders equity will be lost or gained by a pure split.
3) in some circumstances the share price might rise eg. where the R/S takes the share price above $5. This sp is significant as some large pension funds etc cannot invest in stocks below $5, hence an R/s pushing the stock above this will generate more demand and possibly increase the price. An example of this strategy is Citibank which has done a 1/10 R/s for exactly this reason.
4) In Gers case what kills the share price is dilution. Eventually the continuing dilution runs up against the authorised share limit. When this happens and the lenders require to convert further debt, an R/S is required to get the issued shares down so that dilution can continue.
This is why it vital that GERS puts all it's spare cash flow into paying off the debt (not a share buyback). And this is why an R/S alone is not necessarily bad for the stock, but for GERS probably is.