Replies to post #9145 on XpresSpa Group Inc (XSPA)

[outofplano]

You want the funds to stay in the company , this is how a stock grows, when funds are distributed , you have to take a gain/loss almost immediately and thus the 40% + capital gains tax ugh .. I prefer a Settlement not a buyout, huge difference .. imho

[Amer786]

The price of a stock is a combination of the the current value of the company + the present value of the all future revenue.

If a settlement occur and there is an increased in cash, that is an immediate benefit in the price of the stock, in theory it should be a 1 to 1 ratio. The settlement also increases the future revenue for the firm. This increase in future revenue is what would form the premium paid for the stock

Lets say that today stock price is P0

P0= $5

After settlement cash increase therefore stock price after settlement is P1

P1 = P0 + $5(increase in stock price due to cash)
P1 = $10

The present value of future revenue represents the multiple or premium you would pay to own this stock in light of more chance of successful defense of patents let this value be P2

P2 = P1 + $5
P2 = $15

This would be theoretical market price when all of the settlement and future revenue is taken into account. I just used simple numbers to illustrate.

Dividends are revenue that flows to shareholders. If it flows out of the corp it cannot be used for future development. It might be more beneficial to keep in in the company to develop future patents.

If a dividend policy is established, the share price must adjust because there will less money available to the company.

Hope this basic discussion help.s

[postyle]

It is assumed the 80% refers to what VRNG would retain themselves, and 20% would be costs to cover such things as Dickstein Shapiro's contingency. The 80% would also be a pre-tax amount.

So no, the percentages have nothing to do with dividends or cash reserves. Based on the company's business model switch (from Video ringtones to more of an intellectual property aggregation company) -- I would not expect a special dividend with any settlement proceeds or jury award. Most likely they will reinvest in themselves and purchase more patents for long-term revenue generation.

How would settlement money pass through to shareholders? I have read that VRNG would call 80% of a settlement as profits. Does that mean a dividend, and 20% held as cash reserves?