Watney Investopedia leaves out info on the use of a reverse split, it is a business tool. Nothing more and nothing less.
Gtel is using the tool,as it was intended. To lift them from one level to another, in it's growth. Simple!!
From my web site;
Many call the R/S a touch of death, on the OTC:BB. And many times it has become that. But that is because the R/S was used by a failing penny company, to keep it from going into bankruptsy, while on the OTC:BB.Not what the R/S was designed for. The R/S is a tool, designed to help startups shift from a growth company operation, to a successful company operation. And end the need to finance the future growth by issuing shares and start getting institutions & banks to offer loans, because the company now has profits and a more stable financial record.
You will hear many many investor complain, but remember they don't want a successful company to invest in, they want 10 times as many shares to increase their % of profits on small swings. When R/S happen the value of the stock you own STAYS the same. $1,000 worth of stock is still worth $1,000. You just reduce the number of share you own by 10. So, those use to making a 10% profit on a penny run, will now only make a 1% profit. That's the difference between trading pennies and investing in exchange stocks, lower risk and lower profits.
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