This is all IMHO, I'm not an indvestment advisor either.
The previous shares outstanding was approx 50 mil. The Reg S had to be
at least 25 mil, so our total outstanding is now 75 mil. Therefore,
fair market value for whatever we held before is 50/75 of what it
was, assuming no other change in the co. (There was something of a floor around .03, so .03 x 50/75 = .02 = current FMV)
The only problem is, there has been a change in the co., we now have
500K more in assets, and a merger which will make our shell
a profitable corporation. These are good things.
On the other hand, Reg S scares investors away in droves. That's a very bad thing.
_Personally_, for the long term (ie, post acquisition) I figure:
(And note, I'd rather be pleasently suprised than not)
-All authorised shares issued = 150 mil shares
-Revenue of 3.0 million
-Earnings of 300K
This gives a Sales per share at .02 and earnings at .002
According to DLJ, median PE for all industries is 18.5, so
FMV post acquisiton is around .03
_except_
we don't expect to issue 150 mil shares for the first acquisition.
With only 75 mil shares, FMV goes up to .06... And of course, each
acquisition after the first adds to the revenue and earnings.
_conclusion_
I think it was only wishfull thinking to believe that financing
could be obtained without some loss of equity by the existing
shareholders. Reg S isn't great, but _I_ believe that it is preferable
to a reverse split at this time.
I guess, if you believe in the co, this is an "oportunity to average
down". If you're on the fence you "wait and see", and if you think
Reg S is the kiss of death or that Mr. Arnold or Mr. Charles is
trying to pull one over on us, it's time to "get out of Dodge."
JMHO,
-Tony
(sorry this was so long.) |
