Replies to post #77526 on Southridge Enterprises Inc (SRGE)

[HRHolland]

Thank you stervc for the explanation

[terry_mathews]

actually sterling, the company puts out fluff PR's on everything they think will run the market. yet when they dilute they do not notify anybody or explain why. To insure that investors are left in the dark is a gagged TA (of which you have agreed on many occasions is bad). You have accepted this dilution by creating your own theory on what it was used for but have no proof. Your theories are made up rumors unsubstantiated.

The company allowed the dilution and sale of paper to run it's course on the threshold security list and create false perception that massive naked shorts were taking place so buy up and participate in a short squeeze. You were very vocal about what this all meant to the stock and how it would never be paper and yet...here we are. Theories and rumors were created when actual evidence these were wrong were very publicly displayed here. Float is not locked, float is now far more than you think and the company failed to disclose the increase despite repeated pump stories about when/how they were reducing it. BTW the regulators call this fraud as once you show a pattern of press releases disclosing changes in share structure you are expected to do so even when it goes up. Companies can not selectively choose to only put out positive news.

Finally, all your assessments and calculations of PPS valuations are based on a 1 Billion share cap. This recent corporate action is a perfect example as to how easily that cap can be raised, and until the mining revenues actually come in, how foolish it is to use any kind of a theoretical share structure in a future PPS calculation regarding future opportunities. By the time they are mining the AS could be 2, 5, 10X what it is today because they had to "dilute for good reason". SRGE can't pay their bills and play debt games with shares. how do you expect tham to create mining operations without running upo the share structure and understand...you put up in capital a lot of shares before creating revenues. revenues ALWAYS lag expenses.

[fh6282]

Great insight bud, Go SRGE$$$$$$$$$$$$$$$$$$$$$$$

[SKINMAN61]

Very well put my friend. It's what I've been saying all along. THE TIDAL SRGE IS COMING!! Ride the wave or get out of the way

[JohnCM]

This should be stickied on every discussion board, although a tad bias towards the company, excellent post!

[poster44ny]

Right.

The "why" is the key. Same is true for a RS.

If it's just for routine expenses then it's true diluting and that's no good.

But if it's for expansion and future growth then there are more shares, but with more value.

[janice shell]

A few are here trying to claim that ”bad dilution” is happening ”now” with SRGE, but that is not the case at all as there has been absolutely no dilution at all over the past few months.

And how do you know that? The TA's gagged.

[Sooah]

Dilution is any increase to the total Outstanding Shares (OS) regardless to whether it is the restricted or float shares. If the shares never leave the Treasury of shares sitting within the Authorized Shares (AS), then that is "not" dilution. However, if they issue the shares to still be restricted shares, it will increase the Outstanding Shares (OS). Any increase in the OS is dilution.

Dilution is probably one of the most misunderstood concepts as it is generically thought to be just <increase in outstanding shares>. This is simply not a complete definition and perhaps the reason that investors flee when they hear the D word. When one considers dilution, it is important to look at three things together:

1)Earnings
2)Outstanding Shares
3)Net reduction in earnings per common share from item 1 divided by item 2, compared period-over-period

Dilution happens only when we observe a reduction in earnings per common share from increase in outstanding shares from a prior period as this is a relative measure. During a reporting period (let's say annually) where O/S is increased by 50% and simultaneously earnings (net profit) quadrupled, the net impact on earnings per share is an increase not a reduction, hence no dilution occurs in comparison to prior year.

An example of this would be revenues and earnings comparisons for 2012 vs. 2013 on SRGE. We will assume a full year revenues/profit of $12MM/4MM for 2012 and $60MM/14MM for 2013. O/S assumptions are 799900868 and 1.5 Billion shares for 2012 and 2013 respectively. When we run these assumptions, EPS for 2012 and 2013 yields 0.0046 vs 0.0096 respectively. Even if the A/S were fully issued & outstanding at 1.5 billion shares, net earning per common share does not decrease.

The important thing to always consider is the period over period movement to EPS and note its force and direction. Then, we can decide as shareholders whether we can live with it or not.

About <good> and <bad> dilution: IMHO, dilution is not good or bad but really necessary to move forward as a public company. We look for ethical, controlled management in this regard and observe whether this company has shown a pattern of onerous dilution. We also look at future business plans to see what kind of revenue growth the Company is expecting vs. additional issuance of shares and net potential impact to EPS. We also look for timelines--how long to achieve revenue milestones, how many share will be issued and at what price...etc. These are sound methods to use to evaluate whether commons will get diluted or not. To consider just the increase in share structure without increase in revenues/earnings makes no sense. Further, to exit the investment without some due diligence on these relative factors makes no sense either, IMHO.

As long as SRGE shows steady and incremental improvements in EPS period-over-period, year-over-year, dilution really should not be a concern to shareholders. The Company (the sexy Mexicans) has demonstrated time and time again that they believe in <say what we do, do what we say> business management.