Replies to post #11471 on Universal Energy Corp (UVSE)

[Welcome2Pinkyland]

unless management can explain this share increase
here you go-lol
http://ih.advfn.com/p.php?pid=nmona&cb=1216515402&article=27401454&symbol=NB%5EUVSE

Reasons for and Effects of the Proposal

Due to the limited number of shares of common stock available to be issued, the Board has unanimously approved, and voted to recommend that the stockholders approve, an amendment to the Company’s Amended Certificate of Incorporation pursuant to which the number of shares of common stock which the Company would be authorized to issue would be increased from 250,000,000 shares to 1,500,000,000 shares.


The Board believes that an increase in authorized common stock would provide the Company with increased flexibility to issue and/or sell common stock from time to time at the discretion of the Board , and without further authorization by the stockholders, for one or more of the following business purposes: (i) in public or private offerings as a means of obtaining additional capital for the Company’s business; (ii) as part or all of the consideration required to be paid for the acquisition of ongoing businesses or other assets; (iii) to satisfy any current or future financial obligations of the Company; (iv) in connection with the exercise of options, warrants or rights, or the conversion of convertible securities that have been or may be issued by the Company; or (v) pursuant to any benefit, option or stock ownership plan or employment agreement.


The proposed increase in the number of authorized shares of common stock will not change the number of shares of common stock outstanding or the rights of the holders of such stock. Other than for the possibility of issuing new shares of common stock upon the exercise of outstanding stock options or warrants, the Company does not have any immediate plans, arrangements, commitments or understandings with respect to the issuance of any of the additional shares of common stock that would be authorized by the proposed amendment to the Amended Certificate of Incorporation. However, the Company anticipates that it will need to raise additional equity capital in the near future through the issuance of common stock or other securities that are convertible into, or otherwise grant the holder thereof the right to purchase, common stock.


Any issuance of additional shares of common stock could reduce the current stockholders’ proportionate interests in the Company, depending on the number of shares issued and the purpose, terms and conditions of the issuance. Moreover, the issuance of additional shares of common stock could discourage attempts to acquire control of the Company by tender offer or other means. In such a case, stockholders might be deprived of benefits that could result from such an attempt, such as realization of a premium over the market price of their shares in a tender offer or the temporary increase in market price that could result from such an
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attempt. Although the Board intends to issue common stock only when it considers such issuance to be in the best interest of the Company, the issuance of additional shares of common stock may have, among others, a dilutive effect on earnings per share of common stock and on the equity and voting rights of holders of shares of common stock. The Board believes, however, that the benefits of providing the flexibility to issue shares without delay for any business purpose outweigh any such possible disadvantages.


Ownership of shares of common stock entitles each stockholder to one vote per share of common stock. Holders of shares of common stock do not have preemptive rights to subscribe to additional securities that may be issued by the Company, which means that current stockholders do not have a prior right to purchase any new issue of capital stock of the Company in order to maintain their proportionate ownership. Stockholders wishing to maintain their interest, however, may be able to do so through normal market purchases.


The increase in the authorized common stock will be implemented by effecting an amendment to the Company’s Amended Certificate of Incorporation, replacing the current Article 4 with a new Article 4 that states as follows:

“The total number of shares of stock which the corporation is authorized to issue is 1,500,000,000 shares of Common Stock having a par value of $0.0001 per share.”

Assuming the increase in authorized common stock is approved by the stockholders at the Annual Meeting, an amendment to the Company’s Amended Certificate of Incorporation will be filed with the Secretary of State of the State of Delaware, and the increase in authorized common stock will become effective as of 5:00 p.m. EDST time on the date of such filing. The Company expects that such filing will take place on or shortly after the date the Annual Meeting is held. The increase in authorized common stock may be abandoned by the Board at any time before or after the Annual Meeting should the stockholders not approve this proposal.



Vote Required; Board Recommendation

To be approved, this Proposal No. 2 must receive a “for” vote from the holders of a majority of the shares of common stock present and entitled to vote either in person or by proxy at the annual meeting. Abstentions will have the same effect as votes “against” Proposal No. 2; broker non-votes will have no effect.

The Board recommends a vote “for” this Proposal No. 2 to INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 250,000,000 SHARES TO 1,500,000,000 SHARES, AS SET FORTH ABOVE.

[LuvThatMoney]

oilin how bout you read all the other posts, they should answer your stupid questions.

[Ben Bien]

oilin,

An increase in the authorized shares does not necessarily mean that there will be an increase in the outstanding shares; however, it does open up the possibility for dilution, but only for the purpose of financing both current and future projects. The company stated that it would increase the authorized shares to 1,500,000,000 so that in the future it could release more shares when needed. But as stated in the recent filing:

"The proposed increase in the number of authorized shares of common stock will not change the number of shares of common stock outstanding or the rights of the holders of such stock. Other than for the possibility of issuing new shares of common stock upon the exercise of outstanding stock options or warrants, the Company does not have any immediate plans, arrangements, commitments or understandings with respect to the issuance of any of the additional shares of common stock that would be authorized by the proposed amendment to the Amended Certificate of Incorporation. "

This statement means that the current outstanding shares presently is the maximum of authorized shares. That is to say, the current outstanding shares now equal the authorized shares, a quantity that was previously increased to relieve the company of 6 mil. in debt. It is because the maximum of authorized shares has been reached that the company now seeks to increase this limit so that in the future it can have the option--the option, the possibility!--to release more shares. If and when it does so, then it is in case the fact that dilution will occur, but it must also be realized that dilution stands in an inverse relationship with the company's growth. The more the company grows and becomes profitable---the more assets it holds and the more revenues it generates---then the less the dilution will matter. Think of the example of Google, and how GOOG is presently priced between $400 to $500 with a float of 314 million shares. If Google were to introduce more common stock, it would of course necessarily follow that the quantity of shares in the float would increase and due to supply and demand constraints the price would logically decline only if everything else were held constant. But everything else is not held constant, since the stock does not become any less weaker as a long term investment just because there are more shares. Shares rightfully decline in value only when there are severe underlying problems with the ability of the company to grow and produce, such as with the financial firms presently struggling to maintain liquidity.

Though an increase in outstanding shares would decrease the stock's price, it would only do so by a large degree if the company is also not generating adequate revenue to offset the quantity of shares in the float. UVSE fell in price from $1 to $0.01 recently because during this period it suffered intense dilution coupled with the perception that the company is not developing. But as we have read in the recent PR releases, this developmental company is in fact producing and thus moving into a +800% increase in revenue for the thirds quarter of 2008. I maintain my confidence in this company only on the grounds because it continues to produce and to generate increasing revenue. It is quite unlike other developmental OTCBB companies, which only produce PR releases about "future prospects" and "innovative products under development" to hype their stocks. With UVSE, there is no hype, because we know from the filings that they own wells, that they have constructed pipelines, and that they are turning from a revenue stream of $0 to $300,000 per month.

P.S. from now on I will only write incredibly serious posts. I apologize for the incredibly ridiculous yet humorous posts I wrote before. I also apologize for writing long posts; unfortunately my style of writing includes long sentences and long paragraphs. I am not paid to pump stocks as an Investorshub member has accused me of doing. I own 337,452 shares of UVSE.

[Duffau]

I agree. The massive dilution WILL definitely occur as the convertible debenture holders would be absolute fools to not convert.

BUT, between now and then, I think this stock will likely double before dropping back to the triple zeros. So play it while you can and then dump it for good because the weight of the share dilution will eventually bring it down.

Mgmt is like a crack addict with the CDs. They get used to the easy cash and realize the money is in the foolish penny stock gamblers and not in the oil.

[lasernat]

What share increase? There is none!


Everything I post is my opinion, even when there is facts.