It's debatable. On one hand it could be possible that the $100k would buy about 1.5 million shares and the price would end up around 6-7 cents. But then you could have some of those people who bought here at 4 for the last two months selling to capitalize on the gain, and we'd be back down at 4-5 cents.
Or it could show people that the company believes in itself, and some people might decide to wait longer instead of selling out now. Would it attract a lot of new investors to buy the price higher? Probably not a ton. Sometimes you'll see penny stocks send out PRs that they retired a bunch of shares or even just cut the authorized share count (usually those are very large amount of shares such, as reducing from 1 billion to 500m), and that will improve the stock price maybe 10-50%. I don't really see that happening here. They could reduce the authorized share count from 500m to 250m and that could be a show of good faith that they won't need to dilute that much in the near future. But that really does nothing for the underlying stock since that's just authorized shares, not outstanding.
There's also the issue of where they'll get the money. As of last quarterly report they had a grand total of $50,000 in cash, had borrowed $680,000 of the $750,000 limit on their line of credit, and $243,000 of the $250,000 limit on a term loan agreement. They obviously need all the cash they can get to grow the business right now. There is no spare change in the couch cushions to buy a couple hundred shares back. It's obvious (to me at least) that they're doing all they can to NOT dilute the outstanding share count. What would be easier for them? Calling their agent and telling him to sell a 5 million shares on the market so they can raise money, or taking out loans, which in the end will cause Virtra to pay interest ($8,000 in interest during the 3Q)? They have nearly 350 million shares available under the authorized share count. Not diluting the share count is one way the management is helping shareholders. Personally, I hate paying interest on loans. I'm sure all of you do too.
I don't think stock buybacks of anything less that 5% are worth it, and in penny stock land I'd probably increase that minimum to 10%. In the end I think we'll just be twiddling our thumbs until the uplist happens.
AI
