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Microcap & Penny Stocks : EDII -- Ignore unavailable to you. Want to Upgrade?

To: Ken M. who wrote (865)	6/8/1998 12:58:00 PM
From: jmt	Read Replies (1) \| Respond to of 2849

Restricted Shares.. according to accounting rules must be considered in any valuation. Restricted or not, this shareholders have as much a claim on the earning of a company as nonrestricted shareholders. Restricted just means can't be traded. If the company were to distribute all of it's earnings as dividends, restricted shareholders get as much of the proceeds as non-restricted shareholders. If the company goes bankrupt, and there is money left after paying creditors, the proceeds are distributed among all shareholders, restricted and non-restricted. Float only restricts the sale of shares, which could depress the price. It does not limit ownership and according to U.S. accounting standards must be used in all per share calculations for valuation purposes. Even to look at it in another way, a price/earnings ratio of 10x in a simplified form means the investor must wait 10 years to recover what he paid for the stock from earnings. Any valuation looks far into the future. All of the restricted shares will be part of the float at that time. jmt