Yes. Agreed. I've been screaming this... Funny how they wanted it to appear so unclear - certainly playing off the 2.75 billion AS prior.
It is my belief the company wanted everyone to think the 2.5 billion was maxed (not the 2.75 because it was never filed with the SEC).
Then, the 1 for 100 would make perfect sense - putting us right at 25 million shares. A very typical amount for a NASDAQ company of their size.
Leaving the door open to dilute shareholders back to 900 million - yes - it is a typical move.
How hard is it to see, though, that this sort of dilution is not only direct conflict with how the business has been funded to present but completely unnecessary given the cash flow. The 4mm investment was made immediately proceeding the monday AM announcement.
Cash is obviously not the problem.
However...
Spending money on the open market acquisition of stock is expensive. To be sure, the 100 million share buyback would cost at the very minimum 8 million.
Additionally, the 400 million* or more RME shares would cost another 5.2 million to purchase at $.013.
*There's no reason to believe management, in light of heavy expansion, didn't continue to use RME to fund growth. No problems here, but could have been immediately issued again after the last filing.
Per the recent findings that RME shares my be looked at as executive compensation, this buyback becomes even more expensive.
It is my theory that the split will split the 400 million or more RME shares by 100 but not touch the amount they may be bought back at. At least, I haven't seen any information saying it couldn't be.
Therefor, I see the company saving 5.1 million dollars in buyback expenses and a huge amount of personal expense for the possible taxation of that compensation. 400 million shares only costs 50 thousand at this point.
This would give reason to a 250 to 1 buyback as well.
After the split, the company will meet all 4 listing requirements for NASDAQ. And, with all legitimate shares in long hands* the share price will go through the roof after the NASDAQ acceptance. Hedge funds and other financial institutions that could not help drive the price during the squeeze while on the OTCBB now can. During this squeeze we may or may not experience forward splits. It is my belief that we will not experience them until the squeeze is over. Though it may not cost the NSS any more or less money - the company will have a chance to out-do VW for the $1000 PPS squeeze. Taking the title.
*Even though the shares may not necessarily be divided between longs and traders as legit or air shares respectively, if the longs own a sum greater than the available float - it will have the same effect as owning all certs.
Then, all is normal. Demand grows quickly after all the exposure and forward splits are done. 2 of them for a target OS of 25 million. The sweet spot. Welcome upstairs.
The point here is - there's plenty of reasons the RS makes sense. The main reason companies that have RS fail is because they are failing. Quite the opposite here.
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