Veltex Corporation (VLXC)

[Mastman]

A stock dividend accomplishes one main objective and that is to insure that any short sellers are forced to cover due to the reorganization. They have until the ex-dividend date to do so and we may not see the effect of this action until that time unless the price of the stock were to rise significantly. If there are no shorts then the dividend will have minimal effect.

If there are short sellers they are working very hard right now to depress the stock because they know they have to cover.

One major reason for not issuing cash is the tax liability for the company in Utah and for shareholders on a personal level. Shareholders need only adjust their cost basis following the dividend. Most growing companies do not issue cash as it is contrary to their growth objectives. In my opinion, growth is the most important factor for new companies to be successful.

It is my opinion that immediate reaction to this release should not be judged too quickly as it may take some time for the effect to be felt.

We shall see.