Replies to post #10910 on GT Biopharma Inc (GTBP)

[steamed_turtle]

X amount in old becomes y amount in new company. One day it's gone and a new ticket shows up, like when GOV spun off MGMT or whatever that was. Poof!

[BobDoleYahoo]

So what happens to the shares after the merger?

1. The shares will be increased from a few hundred million shares to 5 billion shares as it converts the debt into shares (i.e. meaning they should be debt free or as close to it as possible - this is a good thing for no debt, bad thing for the number of shares).

2. There will be a reverse split on or after the merger to reduce the number of shares from 5 billion to about 16.5 million. This will increase the share price (assuming $0.02) to $6. If the stock price is $0.20, then the share price will be $60 after the merger and reverse split.

3. The reverse split means you own less shares, but at a higher price. Mathematically speaking, your share price value has NOT changed. Some people freak out and sell or freak out because they have less shares and emotionally that takes a toll, but financially speaking, the value is identical. So instead of owning 50,000 shares at $0.10 per share ($5,000 value) you'll own 50,000/300 = 166 or 167 shares at $30 per share ($5,000 value). The intrinsic value does not change.


The reverse split is required for:

1. Reducing the number of shares (5 billion is a lot).

2. Increasing the share price above a few dollars so it can be listed on the Nasdaq instead of the OTC/pink sheets.

3. This is critical because it allows A LOT more people access to investing in this stock, which will allow the price to appreciate further.

4. This will also allow institutions (usually institutions make up about 80-90% of good company's stocks) to buy in, further appreciating the stock price, stabilizing it, and creating liquidity. The reason OTC stocks and pink sheet stocks are so risky is there are no institutions involved. It's just everyone for themselves.

5. Being on the Nasdaq does a few things to the company:

a) Force them into doing financials more regularly and correctly
b) Enable analysts to look into them, thus keeping the company honest and giving shareholders more visibility
c) Allows for the stock to be added to ETFs and mutual funds, thus appreciating the stock price


In other words, the summary is:

1. Get rid of debt
2. Allow OXIS to be on the Nasdaq
3. Allow the share price to increase and stabilize
4. Reverse splits are BAD for BAD companies, but GOOD for GOOD companies.