According to killswitch's repost of the project managers post of some time ago they cant R/S due to a debt/equity contract.
When a company starts earning revenues-any revenue-it becomes beneficial to buy back shares because the shares are greatly undervalued-lag time before shares catch up to revenue as they are discovered etc. This is even more important when substantial revenues-as we expect shortly- are involved.
Say e.g. book value is 10 cents and shares are only trading 5 cents(pennies usually trade 10 to 50 times book on total spec of future earnings,so this would be extremely undervalued-even on the big boards share trade several times book).
If co has sufficient funds,in a sense it makes money by buying back its undervalued shares before the share price catches up to earnings.
Rather the company(and thus legitimate shareholders) profit than future sharks/takeover attempts/hostile positions. If necessary they could then be held as treasury shares without raising A/S and sold at much higher price later if further financing was needed(this should not apply to CWRN w the substantial revenues/margin CWRN will be achieving).
CWRN also plans on retiring board shares in apparent proportion to buyback.
In our case the company wants to reduce shares substantially to support increased share price to eventually upgrade to a higher exchange,partly because P/E ratios are a lot higher on higher exchange than on pinksheets,where(on pinks)ironically actual earnings are undervalued/punished and speculative earnings are usually overvalued(but not in CWRN'S case).
E.g OTCQX has a minimum 10 cent share price-highest OTCBB classification where institutional investors could quickly catapult the price.
A penny co just did a 200:1 R/S to raise price high enough to join OTCQX.
If CWRN earns anywhere close to 200 million in next year they should be able to join OTCQX WITHOUT R/S. They don't intend on R/S,and even if they could by buying out any debt/equity contract,it wouldnt be for a long time,so dont worry about it.
They expect earnings will enable them to climb this ladder without R/S.
This is premature,but for teaching purposes,in the context of an eventual move to a major exchange a R/S could be beneficial(though that would be a long way off-have to show a min of 1 years high earnings or a market cap above 850m(don't quote me-from memory) etc to bypass the normal requirements of three years earnings before could move to a major)because P/E much higher on major exchange.
Extremely undervalued shares also open the door to hostile parties/attempted takeovers,though CWRN's board is keeping 60% of shares to prevent such a possibility.
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