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To: dave brown who wrote (20501)	6/7/1998 11:38:00 PM
From: Terry D.	Read Replies (2) \| Respond to of 27968

Just a copy and paste gang. An example of a reverse split is the following. Assume ABC Corporation has 10,000,000 shares of common stock outstanding. Assume the market price is $10 per share. Assume that ABC Corporation declares a 1 for 4 reverse split. After the reverse split ABC Corporation will have 1/4 as many share outstanding or 2,500,000 shares outstanding. The stock will have a market price of $40. If an individual investor owned 100 shares of ABC before the split at $10 per share, he will own 25 shares at $40 after the split. In either case, his stock will be worth $1,000. He's no better off before or after. Except that the company hopes that the higher stock price will make the company look better and thus more investors will purchase the stock and the stock price will rise as more people buy it. Again, there is no assurance that a company's stock will rise in price after a reverse split. Many times it will decline. There is no way to predict what will happen. However, there has been some academic research on reverse stock splits which indicates that NYSE and AMEX listed companies that reverse split their stock do not perform well subsequent to the split. This may be so because many times a listed company on an exchange which has to reverse split its stock to do what the market won't do, is not in good shape. There is also evidence that small cap stocks which reverse split their stock and can generate better earnings receive a benefit from the reverse split. These companies are trying to boost their price into a range which is more acceptable to traders. For these companies, a reverse stock split works well. My personal experience in reverse splits has been negative. Others may have had good experiences. I think a company should EARN listing rights on it's own merits not a phoney share price. If you don't have what it takes to stay on the big board then stay on the OTCBB until you qualify. With the new filing regulations going into effect I think that should be number 1 priority now. Terry