I think it’s important to understand that we shareholders view this action to be generated by SKTO as a 3 to 1 forward split, but it’s actually a little different and a little better. Something very special and very positive for shareholders is being setup here with SKTO and their TEAM. You see… if this was a ”normal” or ”regular” 3-1 forward split… we would be getting ”3” shares of ”SKTO” for every ”1” share of ”SKTO” that we purchase.
This is what’s going to force a ”physical accounting” of SKTO shares. This is very important as I will explain why throughout this post, but be sure to review the key examples within the last section of this post. First, there is much that I think must be understood in order to fully understand the magnitude of the last section of examples.
Like I had said before, I won’t get into debating if there is a short or naked short position in SKTO, because if so, how they are doing this share distribution of the new shares of ”Medical Greens” to us SKTO shareholders will rectify such. This ”physical accounting” of SKTO shares means that any covering of any kind of short or naked short position can’t be ”electronically created” above the amount of ”actual” or ”legitimate” shares of SKTO that truly exists to mask any of the short or naked short positions. This ”physical accounting” of SKTO shares means that short or naked short positions have to be ”physically accounted for” because there are ”not” any ”electronically existing shares of Medical Greens” to replace (or distribute) to those people holding ”legitimate” SKTO shares that are ”electronically” existing in all of our brokerage accounts. These shares to be distributed are Medical Greens shares which are shares that exist ”outside” of the electronic system. Once this process is put in place and filed with the SEC, then I expect to see SKTO listed of the ”Regulation SHO Threshold Security List” to officially confirm any ”Failure to Delivers” (FTDs) which is synonymous with naked short shares. Again, this is if any FTDs actually do exist. Read below to further understand why I say such and to understand why the name, ticker, & CUSIP# changes: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=89229433 http://ih.advfn.com/p.php?pid=nmona&article=58142538
Also significant to note, there just might be a chance that although we will see a ”share adjustment” in our SKTO positions by an increase of shares ”3-times” the amount we own, we ”might not” see a ”price adjustment” of a decrease by ”3-times” the amount post forward split as what we would usually see. If this was a regular forward split where we would be getting ”3” shares of ”SKTO” for every ”1” share of ”SKTO” that we purchase, then I would say that such would be the case where we would see a ”zero sum” transaction where the value would be equal as the price would decrease 3 fold as our position of shares increase 3 fold. Imagine having 3 times the amount of your shares, but at the same price of the last day pre-split price creating an ”additional sum” transaction for us shareholders.
Since we are getting ”3” shares of ”Medical Greens” for every ”1” share of ”SKTO” that we purchase, there is a chance that a ”price adjustment” logically will ”not” be required because of this technically not being a forward split of SKTO shares which could logically require that the price of SKTO remains as is as our positions are increased by 3 to create an ”additional sum” transaction. I think that this will be kind of like an ”Initial Public Offering (IPO)” where if SKTO could show justification in revenues or contracts to justify a value where such ”zero sum” transaction is not required, then the SEC just might allow the closing price of SKTO on the date that the forward split takes place to either remain the same or even be allowed to open up higher and not have the price of SKTO reduced 3-fold. I’m not sure, but either way would be awesome for us SKTO shareholders as this is only some logical food for thought.
Example: With a ”regular” 3-1 forward split… Pre-split, 3,000,000 shares at .03 per share would have a value of $90,000. Post-split, the 3,000,000 shares would increase to 9,000,000 shares, but the price would open up at a price decrease equivalent to 3-times the .03 per share to open up at .01 per share creating a ”zero sum” transaction that exists because of the same value of $90,000 would exist for that same person or position of shares.
However, since this is ”not a regular” forward split… maybe it’s something like this… Pre-split, 3,000,000 shares at .03 per share would have a value of $90,000. Post-split, the 3,000,000 shares would increase to 9,000,000 shares as the previous example, but the difference will be that the price would open up at an ”unchanged price of .03 per share” as there will ”not” be a price decrease equivalent to 3-times the .03 per share amount therefore creating an ”additional sum” transaction that exists because of the now increased value of $270,000 would exist for that same person or position of shares. Again, it would open up at .03 per share while at the same time we shareholders being issued 3-times the amount of our holdings. To better understand how this could happen, see this transaction like being awarded a 33.33% stock dividend of which I will talk about later. So, instead of a ”zero sum” transaction existing, there would exist an ”additional sum” transaction that be ”3-fold” the amount of shares we currently own.
Regardless, we SKTO shareholders are going to see our current position of shares increase 3 times greater than they are now. The short and naked short positions will be multiplied or increased by 3 times too for the position/amount of shares shorted or naked shorted if such positions exist. You see, covering is about putting back into inventory the amount of shares that were taken out of inventory when there was not an accounted for inventory initially existing regardless to what the price is of the stock. So, if there is nobody who has shorted or naked shorted SKTO then they won’t have anything to worry about, but if there is an entity that has shorted or naked shorted SKTO and don’t cover before the ”Date of Record” gets here (or maybe when the distribution of shares take place), then they will have compounded their covering issues by 3-fold the original issue that existed for covering.
Now let’s talk about this justification of ”Revenues” and ”Contracts” that exists to justify such a higher value as I had previously mentioned.
** On 03/11/2013 @ 2:59PM the SKTO PR below stated that… In 2013 alone, Medical Greens (SKTO) has already contracted over $12.5 Million in licensing and service agreements: http://ih.advfn.com/p.php?pid=nmona&article=56669955
Within their filings below, SKTO filed to have Net Income of $4,929,129 for the 3 Months ended March 31, 2013 of which was derived from $5,096,700 in Revenues logged as ”Account Receivables” to be obtained from their clients in the coming days: http://www.otcmarkets.com/financialReportViewer?symbol=SKTO&id=103831
All of the above growth looks to have transpired within the 1st Quarter of 2013. This was last quarter so it is expected for us shareholders to begin seeing some of the Revenues from those contracts to be coming in soon. From below, an investor named StephCurry had personally spoken to Jeff Benz (the SKTO General Counsel and Executive Vice President of Business, Legal, and Government Affairs) and confirmed that Jeff has actually seen these contracts with his own eyes: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=88053149
This ”major market” type of mentality is what will create a fundamental valuation to exist within the company, but before we assess this fundamental valuation that I believe this TEAM sees, I think it is important now to discuss why a stock/company would execute a forward split.
What SKTO is doing is greatly rewarding their shareholders and better positioning the company to also have shares to use for future acquisitions as like how major market companies operate that too are generating huge revenues with profits like here with SKTO. Remember I spoke about the company’s mentality above. They could have just simply issued them all of the shares that would be used for future acquisitions, but instead they increased their holdings along with increasing us shareholder’s holdings of shares by doing ”in essence” a forward split. This is a huge psychological effect on their shareholders because it shows that the company is in to rewarding everyone and not just themselves.
I say ”in essence” because a ”normal” or ”regular” forward split is when a stock is split into smaller proportions and that ”same” stock is disseminated to the shareholders in smaller pieces. Well, here with SKTO, that is not what’s happening. Ok, in essence, the end result would be as like a ”regular” forward split was delivered when all is said and done, but the initial execution of this transaction will not be that of a forward split which is why it was not called such within their PR. I think the post below by zeffie said it best by calling this a transfer of ownership: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=89327191
Or this transaction could be termed as a type of ”share exchange” agreement, but for our purposes and to keep it simple, I’ll just refer to it as a forward split. Bottom line, a ”forward split” is the opposite of a ”reverse split” within the market. A forward split is done to signify growth that the company believes to be transpiring with the company’s revenues and profits and its management wants its shareholders to be ”rewarded” by directly partaking in this growth. Keep in mind that most companies (especially penny stock companies) are selfish and don’t want their shareholders to participate directly with the company’s growth unlike SKTO and their management team. SKTO and their management team have yet proven once again that they are very unselfish and cares a great deal about their shareholders by not just giving us the 100 million shares in AEGY, but by also giving us 3-fold the amount of SKTO shares we own when everything is said and done.
Officially, a forward stock split is also considered and labeled a stock dividend of which is another concept of thought for what is transpiring here. If this transaction is executed as a stock dividend and versus a forward split, then there “will not” be a price adjustment by 3-fold, but there still will be a 3-fold adjustment with our shares owned. This means shares given to its shareholders by the company are basically for free by just being a shareholder.
Let’s consider some theories for thought for a better understanding of the power behind doing a forward split.
Example---SKTO 3-1...Post Split Power The power of the post-split is that a 1% gain would be equivalent to a 3% gain for us who bought SKTO pre-split. A 10% gain would be equivalent to a $30% gain for us who bought SKTO pre-split. A 50% gain would be equivalent to a 150% gain for us who bought SKTO pre-split. A 100% gain would be equivalent to a 300% gain for us who bought SKTO pre-split. I think you get the point as this is the power of the forward split effect and why people hold past the forward split (as will be seen in the examples in the last section of this post). Usually the company has huge news to release ”after the forward split” to confirm its growth and why they believe that a forward split was necessary in the first place. They know what they have regardless to what some might believe as the contrary. The extra liquidity is created by the company to provide a greater ”supply” of shares to the market for the expected increase in ”demand” that is about to transpire. This is what we would see as ”good dilution” as it is required for the growth of the company while not diluting us shareholder’s position of shares, but instead ”increasing” our shares with this balance of distribution. This is a huge reward for us SKTO shareholders and is a very generous act by the SKTO management TEAM.
The Marble Theory Here’s another theory to consider that might help to understand the logic behind a forward split. If there was a group of kids and one kid had one boulder (large marble) and the rest had nothing, then that one kid would be forced to play marbles with nobody. Maybe that kid was the only kid whose parents could afford buying a boulder.
If many parents can't afford to buy their kids Boulders at the going price of $15 then many kids would possibly suffer and miss out on the joy of playing marbles. What a tragedy. Now imagine if the boulder was to split into 3 smaller marbles. Then all kids would then have the opportunity to enjoy playing marbles that can afford $5 per marble which is 3 times cheaper than the price of $15 for the boulder which was too expensive.
A company would create an increase in ”demand” for marbles by increasing the ”supply” of marbles by splitting the boulder into 3 smaller marbles so that parent's would be able to afford them. By the company not doing so, only that one kid would be happy with his boulder and would be forced to play alone and the company would have far less of a customer base interested in buying marbles therefore decreasing the growth of the company. After experimenting with that one boulder, you now should see the anticipated growth from its management's view of future potential.
Keep in mind too that just because you don't like marbles doesn’t mean that everyone else don't like marbles either. Still, this logic should apply to pie, cookies, or whatever is your desire for an example to include a stock.
The current Outstanding Shares (OS) for SKTO is 362,050,303 shares. With this 3-1 forward split rationale, the new OS for the new entity will be 3 times the previous SKTO OS as indicated below:
362,050,303 shares x 3 = 1,086,150,909 shares for New OS
SKTO filed financials as indicated above to have Net Income in the amount of $4,929,129 for the 1st Quarter of 2013.
This .59 per share SKTO valuation is post-split, but for us who have bought in before the forward split, the .59 per share is equivalent to “.59 x3” or $1.77 per share pre-split since buying SKTO before the forward split. Imagine having 3 times the amount of shares you have now and those shares trading at an amount far higher than where it’s trading at right now.
In my opinion, this 3-1 forward split is more like a 33.33% stock dividend to where both SKTO and Medical Greens simply is merged into one company to simplify reporting. The share exchange piece with Medical Greens is simply to administratively fix things to where SKTO is dissolved as an entity and re-emerge as Medical Greens with giving us 3 times the amount of shares we originally had. SKTO and Medical Greens are basically one in the same so they are simply getting 1/3 valuation of itself that is already existing within itself. The valuation is still intact and existing as the same single reporting entity of which will still own the complete 3/3 of the valuation to be filed.
I believe that the management TEAM for SKTO is pretty new to the penny stock world because of them having what I called a major market mentality above. I believe that there are some things to where they are learning as they go, but I believe that they are still 100% legit and will prove to be such. I’m fine with that because I am confident that FINRA and the SEC will keep them in order as they have been on contact with them both I am sure.
Soon, Kevin Allyn is going to be interviewed on the Larry King Show which was also mentioned within the PR above. Larry has 2,423,757 followers on Twitter. The Larry King Show is viewed and carried by Fox, Time Warner, and Discovery that is viewed by a few million people. "Larry King Now" launched on RT-TV June 3. RT-TV (cable / dish TV network) reaches 85 million American viewers and 500 million viewers worldwide: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=88758530 http://investorshub.advfn.com/boards/read_msg.aspx?message_id=88751946
I'm sure the discussion will be about SKTO and AEGY as SKTO is scheduled to be receiving a dividend in AEGY shares. With SKTO making over $30 million in Revenues with the majority being profits and AEGY making over $5 million in Revenues with the majority of that being profits, I expect huge announcements to come from this interview with Larry King. Here's the news again below for those who have not seen it yet: http://www.marketwire.com/press-release/skto-chairman-to-be-on-nationwide-radio-show-1801984.htm
SK3 Group, Inc. (OTC Pink: SKTO) announces that it has engaged the firm of L.L. Bradford Company, LLC to audit the financial statements of SKTO for the years ended 2010 through and 2012 and the current periods to date, and of its subsidiary, Medical Greens, Inc. through June 30, 2013. Audited financial statements are required for the pending registration statement for the merger of SKTO and Medical Greens announced last week, and the issuance of the new shares to be issued as a result of the merger.
L.L. Bradford is a PCAOB registered independent audit firm with offices in Las Vegas, Houston, Kansas and Southern California. SKTO has signed engagement letters for the respective audits and expect to start the audit process early next week. …
I think that it is important to understand that I believe that the things that SKTO are doing is not an attempt to combat the shorts or naked shorts, but instead, they are simply doing the things that are required for them to do to become very legit within the market place. It’s just so happen that the way they are becoming legit, will also rectify any short or naked short positions too. The things they are doing are simply a must. Should we really think that they would assemble a TEAM of this magnitude and do all that they have done thus far if they really didn’t know that they have the goods? In my opinion, those who don’t see it now… will see it later.
All of the above are some of the main reasons why I believe that the company has been accepted to air on the Larry King Show. I think they know that they have a very serious and legit story to tell that needs to be told nationally and internationally.
In order to fully understand the magnitude of what can happen with doing a forward split, below are some ”important” examples of stocks that had done forward splits some years ago. Pay particular attention to where the price of the stock was pre-split compared to where the price of the stock had gone post-split.
Pre-split vs Post-split Analysis NOTE:* Denotes Post Split Conversion to Pre-Split Price for relative comparison.
Forward Split Ratio of 100 for 1 COOX - (OTCBB) Announced on Oct 4, 2000... OS = 250,000...FLOAT = 220,000 Price Range (Pre-Split) Oct 3 ** Closed at $1.50 Oct 4 ** Traded between $4.50 - $11.50 Oct 5 ** Traded between $7.03 - $18.50 Oct 6 ** Traded between $12.50 - $19.00 Price Range (Post-Split) Oct 10 **$.10 - $.38 Oct 31 ** $.25 - $.437 Nov 15 ** $.40 - $.45 Jan 09 ** $.30 - $1.87.................... * $187.00 = Equivalent Pre-split Price
AI
