Reverse Merger/ Reverse Split issue
The company being acquired, i.e the company which will
rule in fact after being acquired,
needs to have control with respect of the number of shares
whatever the number of share is, they will emit the number
of required restricted shares.
Reverse split helps as they may don't have enough authorized
shares and they don't want to emit Zillions of new shares
Also, having a price in the $10 helps bringing
SERIOUS investors ( not amateurs like Archie LOL )
If the stock goes up, they may lower the r/s ratio,
but they will issue more restricted shares.
They want to have a big part of the company,
and this is legitimate.
Problem is that the acquiring company is supposed to have
very little value, which is not the case anymore.
So David point is valid, but what are the consequences ?
Whether this will have an impact on stock value is a different
story. As the shares will be restricted, it may have VERY
LITTLE IMPACT on stock progression in the short term if
the demand for share is sustained as people discover the
company has real value. If value of company is limited
then it will be a BLOOD BATH as people will hold a small portion
of nothing instead of a big portion of nothing
This does not make much difference, only the speed of the
down trend will be affected.
LOL
:)
Hope for the best
Archie |
