This was pulled from the PKGP thread. Notice the 30% figure.
CSMA is 'giving up' only 5% on their merger!
I also thought this was a good explanation for the
situation we are presently in.
Reverse mergers ... the smaller company (PKGP) permits itself to be absorbed by a
another one, but brings its name with it. Often the other one is merely a corporate shell ...
a company which is all legal and everything, but which has no functioning parts, ie it
doesn't make anything or do anything on its own. The absorbee (PKGP) takes over the
capital structure of the shell, and provides the inner workings -- the product or service.
If the shell is already listed on an exchange, it provides instant listing for PKGP.
Back in the '80's, people built "blind shells" for just such purposes. In other words, they
incorporated a company with a generic name and capitalized it sufficiently to get it listed
... back when listing was much easier. So the original investors in the shell would have no
idea what business they actually were getting into. But when the merger occurred, the
deal often left them with, say, 30% of the newly-merged company, while they had put up
original capital equivalent to only a tiny fraction of the combined enterprise.
Now shells often are companies which are emerging from bankruptcy. The BK process
cleans them of all debts, and their new "value" is whatever they are worth in a reverse
merger.
Benefit of all this to PKGP shareholders, if it should come about that way, is instant listing
on an exchange or NASDAQ.
And like CSMA, PKGP investors are wondering why the stock price
isn't moving higher. No matter how undervalued a stock may be,
there has to be buyers for a stock to move up. CSMA has little
buyers IMHO. It may continue on the present course for weeks
before someone, or a group, decides for themselves that CSMA
is undervalued. Until then, where we are is where we're at. <g>
Happy investing!
KZAP
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