To: justaninvestor who wrote (1379 ) 12/10/1998 2:11:00 AM From: Ontopequity Respond to
Thanks for the information. The amount of shares outstanding is certainly not unreasonable for a high tech company at this stage of development. As the company grows in revenues and market capitalization, it would only be normal to expect the release of more equity into the market. Many large tech companies have several hundred million shares outstanding, but the demand is there to support the market, and these companies are very mature in their respective industries. I know of one high tech company on the VSE with 20 million shares out and they still have not had a profitable year. To make matters worse the technology is not perceived by the market as "hot". Though the company has over 80 $ Million in request for quotations on it's desk, the shares are trading at $ .27 for a market cap of $5.4 Million. The trouble with this share structure is that it is too loose and diluted for this stage in it's development. It takes too much demand to bid the stock price up, and the company is forced to keep issuing more equity at low prices which further compounds the problem.This is a sad vicious circle that ends with the company either finding other non equity financing arrangements, doing a roll back on the shares, or going out of business. It would be far better for them to have 9.7 Million shares out and trading at $ .56. This would give the same market cap, but it sure is a lot easier to move the stock price up and keep it there when more financing is required. If the management at JAWS can get the stock price up to a much higher multiple, they will of course be able to issue a lot less shares , and get a lot more dollar value for those shares. JAWS may well be able to avoid the vicious circle of over dilution which plagues so many other companies out there. ontopequity.com
