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Microcap & Penny Stocks : ABFG - AMERICAN BENEFITS GROUP, INC. -- Ignore unavailable to you. Want to Upgrade?

To: Janice Shell who wrote (4070)	7/6/1999 11:53:00 PM
From: Angusb	Respond to of 4128

Perhaps not. Has the deal actually closed? Do you think the asset purchase agreement has some "out" in the event that the shares issued are worthless (or nearly so)? Do you think there is a cash component?? Do you think that the actual price paid might be useful to investors??

To: Janice Shell who wrote (4070)	7/7/1999 8:50:00 AM
From: Daniel Chisholm	Read Replies (2) \| Respond to of 4128

This is really MAJOR dilution. A minor technical quibble, Janice. Just because a large number of new shares was issued, does not necessarily imply that "dilution" occurred. Shares (of some value) were exchanged for businesses (of some value). Dilution of shareholder value occurs only when the value of the shares issued exceeds the value of the assets acquired. Conversely, "accretion" of shareholder value occurs when the value of the acquired asset exceeds that of the issued shares. If you think that the shares are/were virtually worthless, then any asset of value that they are able to acquire, even if they have to issue a very large number of shares, is actually to the benefit of shareholders. Of course, when the actual numbers are seen, this can help clarify the actual value of the shares, which in many cases (e.g. this one) can be substantially less than recent market trades. For example, let's say the company today is actually worth $2 million (I have my doubts that it is worth this much). Spreading this value out over 50 million shares, this works out to 4 cents per share. This is in spite of the fact that the shares recently traded at 35 cents, due to a combination of supply, demand, hopes, dreams, flim flam and fuzzy thinking. If they were to sell 20 million new shares for 10 cents each and raise $2 million of cold hard cash, then in spite of the fact that they sold such shares at such a steep discount to the market price the company would be worth $4 million, spread over 70 million shares -- each share would now be worth 5.7 cents, an accretion of value for pre-existing shareholders, though a dilution of value for the new purchasers wh paid 10 cents. This shareholder value math applies not only to scams but also to all other companies with highly overvalued stock (internet companies, etc). - Daniel