Replies to post #309678 on ERHC Energy Inc (ERHE)

[midtieroil]

Here is how a simple reverse split works. After the rs there will be only 30 million ERHC shares outstanding. And there will be 2.97 billion shares available to be issued out of the 3 billion still authorized.

Of course the big concern now is that the toxic death spiral might continue with more cds issued, more conversions, more bargain basement shares being dumped on the market at any price and an ever decreasing share price.

Not only is this toxic debt, this is a textbook example of a toxic debt death spiral. The question is can ERHC pull out of this spiral before it comes crashing to the ground.

Hard to believe that those that had 10 million shares will now have 100,000 shares. Time for some more delusion insurance?

[nordicroots]

OMG - you're right! According to wiki.fool.com they confirm same. This is not a good thing for legacy shareholders as normally asking for more authorized shares requires a vote, and I would prefer being given the right to weigh in on such a decision.

Here is what they have to say of reverse splits:

A reverse split lowers the number of shares outstanding. For example: if a company reverse splits its stock 1-for-2, it means the shareholders must turn in their certificates and receive new certificates evidencing ownership of half the previous number of shares. A shareholder who owns 1,000 shares pre-split will own 500 shares of the post-split stock. The total number of outstanding shares decreases but the total number of authorized shares doesn't change. If the company had 100 million authorized shares and 50 million shares issued and outstanding pre-split, it will have 25 million issued and outstanding shares post-split and 100 million shares authorized. Post-split, the company will have 75 million shares that can be issued in the future if needed to raise capital. Prior to the reverse split, this available number of authorized shares had been 50 million out of the total 100 million authorized. - See more at: http://wiki.fool.com/Does_a_Stock_Split_Impact_Authorized_Shares%3F#sthash.TvQQ3yMs.dpuf