Posted On: 02/05/2014 4:47:53 PM
Post# of 16816
Many people have the assumption a R/S is automatically bad. That's the case when the CEO does a R/S on the O/S but leaves A/S unchanged (gives room for large-scale dilution since A/S is no longer maxed).
Where an R/S is proportionate (say 10:1 O/S and 10:1 A/S to use your example) then it's neutral, or positive because it draws in investors who won't trade the super-sub-penny, sub-penny or even penny range. Market cap is the same and the ability to dilute hasn't changed since A/S is still maxed out (as it is in BCAP's case).
BCAP would look like this with a 10:1 R/S: one would see beforehand a 2.36B O/S and 2.4B A/S and $0.01 share price; and post R/S a 236M O/S and 240M A/S with a share price of $0.10. Both before and after a R/S BCAP's market cap would be $23.6M still with no room for dilution.
Caveat is:
1. No-one knows if buybacks have occured.
2. Talk of a R/S is purely hypothetical at this point in time because only Matt Dwyer knows the current share structure and any changes.
Where an R/S is proportionate (say 10:1 O/S and 10:1 A/S to use your example) then it's neutral, or positive because it draws in investors who won't trade the super-sub-penny, sub-penny or even penny range. Market cap is the same and the ability to dilute hasn't changed since A/S is still maxed out (as it is in BCAP's case).
BCAP would look like this with a 10:1 R/S: one would see beforehand a 2.36B O/S and 2.4B A/S and $0.01 share price; and post R/S a 236M O/S and 240M A/S with a share price of $0.10. Both before and after a R/S BCAP's market cap would be $23.6M still with no room for dilution.
Caveat is:
1. No-one knows if buybacks have occured.
2. Talk of a R/S is purely hypothetical at this point in time because only Matt Dwyer knows the current share structure and any changes.
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