Replies to post #39179 on DHS Holding Co. (fka DHSM)

[Militia Man]

No! What is dilution.. :-) Not such a bad thing, that is used to suggest it is on DHSM is it?

DHSM~ Dilution

What is Dilution?

Is it good, or bad ?

Dilution is when the company moves shares from the AS (authorized shares) to the OS (outstanding shares) or tradeable inventory, for cash investments in the company.

This means there are more shares at the same market price and reduces the size of the EPS.
It doesn't reduce the price or value of the stock.
But many pennylanders think it does.


Dilution doesn't change price, it changes EPS. Creating loss in company value, not stock value.

Hardly 1 in a 1000 OTC companies have an EPS to effect.
So, dilution can't effect their company value in the first place.
Whats the value of no earnings, thus no EPS.

But, the value of more cash to a startup is huge!
Cash gives them the ability to attempt to grow.
Without the cash it can't.
So logic says, the retail herd should be happy about dilution.
After all, they want the comapny to grow don't they.

On the OTC, "dilution" is the best news one can hear !

Not only does it give the company a chance at growth, it doesn't effect their EPS value one bit.
They have no EPS to effect.
Plus, every time VCs get there hands on large amounts of shares,
they buy a run, and we can trade for profits !

So, "dilution" is a win for the company, a win for the Venture capital firm,
and a win for the educated pennyland trader, on the OTC.




Funding

Remember, "start-up companies"have no business except "selling stock".

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=75262048


One of the easiest ways, for a "start-up company" that trades on the OTC,
to gain the attention it wants, is to get "promoted".

In many cases, the compensation to the " Promoter " is "in shares".

To be more precise, the shares are "restricted shares" by the company,
and "free trading shares" from an undisclosed third party.

In the "start-up stage", the Promotion will give the company some publicity,
however, it may not lead to the desired results, due to the "share-based compensation".

That's not necessarily a bad decision on the part of the company's management.
They just may not have the option to pay in cash.

The thing about "promotions", is that they tend to work better, when "paid with cash".





Venture Capitalist -VC

A "venture capitalist" is a person who invests in a business venture, providing capital for start-up or expansion.
"Venture capitalists" are looking for a higher rate of return than would be given by more traditional investments.

A "venture capitalist" can be a "professional investor" , or "Market Maker".
The "venture capitalist" may have no business experience applicable to the industry your company is involved in, and is focused on "the potential rate of return" your company can provide.

http://sbinfocanada.about.com/cs/financing/g/ventcap.htm#

"Promoters" are "Venture Capitalist" firms.
"Venture capital" (VC) is financial capital provided to early-stage, high-potential, high risk, growth startup companies.
The "venture capital" fund makes money by "owning equity-shares" in the companies it invests in.

http://en.wikipedia.org/wiki/Venture_capital

[yzkiley]

Without dilution a business can't be built. Lets remember something. It takes money to make money. Look at the facts here, company has tried many ways to get going and found something that might actually work and the way things are going its telling us that they want to make money. Great direction here, and possible reward IMO. When the revenues start to come in its a whole new ball game. GO DHSM