JKAK-Never saw this move before.....giving back most of their shares for free and then buying new shares to put money into the company. This is a good thing for us imho.
The Board of Directors is now considering the possible procurement of additional "seed" money from the Company's management and persons who have a relationship with management. Currently, the Board is considering attempting to raise approximately $687,500 by issuing 1,926,000 post-split shares of Common Stock; and
2. The Board of Directors is now considering the possible grant of approximately 3,921,000 post-split shares of Common Stock to key employees, consultants and persons with whom the Company may enter into contractual relationships. These shares would vest only upon the achievement of well-defined success goals or the continued provision of services to the Company for stipulated periods of time.
The Reverse Stock Split need not be completed to undertake the two types of shares issuances described immediately above, because the Company currently has sufficient authorized but unissued shares to do so. However, the Board of Directors does not expect that it will undertake either of the two types of shares issuances described immediately above unless the Reverse Stock Split is approved and completed. If the Reverse Stock Split is approved and completed, Golden Gate Homes, Inc., the Company's largest stockholder, has indicated that it will return to the Company's treasury approximately 3,257,898 post-split shares now owned by it, in order to keep the number of shares of Common Stock outstanding after the issuances described immediately above at a level favorable to the Company. As a result, after the Reverse Stock Split, such issuances and the return of such treasury shares, the Company could expect to have approximately 6,237,722 shares issued and outstanding.
This part not as good
As stated above, the Company is currently in the very early stages of attempting to raise funds. Prior to the December 31, 2009 change in control of the Company described above, Golden Gate had entered into a "best efforts" placement agreement with a broker/dealer. This agreement may be assigned to the Company, or the Company may enter into a similar agreement with the same broker/dealer. However, no terms or conditions of any placement have been set, and the Company has no letter of intent or agreement in principal in effect (much less any definitive agreement) regarding any financing by any investor, and there can be no assurance that the Company will ever be successful in raising any funds. Nevertheless, the Board of Directors believes that a future financing transaction could involve a large enough number of shares of Common Stock that it could not be completed without the prior approval and completion of the Reverse Stock Split.
The A/S is 600 million, there are 128 million shares O/S now. They are saying the remaining 472 million shares left in A/S might not be enough for their financing deal.
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