The subject of potential dilution is once again front and center. First a little perspective on the recent past. STWA has not sold any new shares for quite sometime (cash has been received from the exercise of warrants from old offerings). They remain below the authorized limit of 200 million shares. The only recent new shares that represent dilution have been from grants to directors as bonuses, some payments for services, etc. To measure the magnitude of that dilution divide a recent director share bonus of approx. 20,000 shares by the outstanding share count of approx. 165,000,000 shares. Rounded off that number is .0001 or one one hundredth of one percent. That is dilution I can live with if it is used to attract and retain the people that STWA thinks it needs. A $350,000 salary for Mr Kyte and $290,000 for Greg Bigger seems more than reasonable to me, because I am looking at this thru the prism of where I think we will be tomorrow and who got us there. If we were to remain strictly an R&D company for several more years I would argue differently. The same could be said of a lot of other expenses that may be worthwhile if we are moving to commercialization, but can't be afforded in a strictly R&D setting.
Management is now seeking to expand the authorized number of shares for POTENTIAL issuance to 300 million from 200 million. Zizek rightly points out that this will give the company added financial flexibility. NOW HERE ARE WHAT I CONSIDER TO BE THE MOST IMPORTANT POINTS WHEN VOTING MY PROXY. I trust management (if I didn't I would not own any shares - period). If STWA is about to transition from R&D to commercialization then the company needs to prepare ahead of time financially for whatever the future brings. If we ever hope to become a much bigger company it will require capital. Just relying on retained earnings, borrowing, and some forms of short term financing may not be enough. I trust management to carefully weigh the value of any new share sales (by the way they don't want to dilute their ownership stake either). Again, if I felt this money was just going to line the pockets of management, I would sell my shares. If it is used to more rapidly grow the company, then I am all for it.
I believe that if STWA does sell more shares they will wait until additional positive news has driven the share price higher. Better to sell new shares at $2 or more per share than $1.30 per share (or $.25 to $.40 per share as in the past). This bears repeating. New share sales, if they occur, will be at prevailing market prices, bringing in a lot more money per share than in the past.
Something else to remember, the act of selling new shares is by itself not necessarily earnings dilutive (this is different from ownership dilution). Below are some excepts from my post #3994 addressing that point.
"Earnings dilution occurs when the share count increases without a sufficient bump in profits to maintain or increase the earnings per share. A simple example to illustrate one way that new share issuance can be ANTI-dilutive is the following: Company A is buying company B. Company A issues new shares used to buy B. If company B has a higher ROE (return on equity) than Company A, then the earnings per share for the new company A (A&B combined), will in fact be higher than the old company A, or antidilutive.
Going one step further, anytime the proceeds from the sale of securities are used in such a manner as to increase earnings per share, by definition, this is not earnings dilution. It may take some time before the use becomes accretive to earnings, such as building a new factory or funding the launch of a new product.
IMO the term "dilution" is much overused. How the money is used is the key. Obviously no one wants the share count to continually rise unless the perceived future value of the company is going to rise even faster. Everyday companies all over the world are issuing and selling new stock to raise money to build their businesses. If this "dilution" was always a bad thing that hurt existing stockholders then that form of financing would die out.
Naysayers continually shout "SHARE DILUTION" to warn us about bad things to come. Their perception is that the proceeds from all of the capital raises are going down the drain or the share count will be so high that earnings per share will never be meaningful. STWA shareholders believe that the capital raises are needed and will pay off, that profits will be big enough to spread favorably over the fully diluted share count."
I plan to give STWA management my full support. On balance, I believe they have done an excellent job.
Market Data 
Markets 
AI
