As I understand it, if NTEK has a 15:1 RS, the AS
Post# of 96879
Posted On: 04/09/2016 2:46:24 PM
As I understand it, if NTEK has a 15:1 RS, the AS would stay the same at 1.79B, while the OS drops from about 1.738 billion to about 116 million. That means the company can dilute 1.674 billion MORE shares. This is why people hate reverse splits.
Obviously, NTEK needs more money, which is why the company is planning the RS. So, dilution is expected. And I agree 100 percent that even incredible news, followed by dilution, will not sustain the PPS. We had some pretty major announcements while diluting over the past year and look where the PPS is now.
It would be great if the company could afford to buy back shares, but NTEK doesn't have the money to do this in a way that would affect the PPS in a material way. Let's say the share price doesn't jump too much and they can buy back the shares at an average of .01 per share. This would only afford them about 100 million shares. They'd still have 1.637 billion shares outstanding and they'd STILL need to raise $8 million to $10 million for the additional content they claimed they need.
It appears the company will go through with the RS. Hopefully, it will dilute VERY, VERY sparingly, and rely on funding from a partner for the $8 million - $10 million NTEK claimed it needs for content. If NTEK leadership relies on the RS to fund the $8 million to $10 million, it would devastate the PPS. And, in that case, we might be better off, instead, selling the company for anything above 25 cents per share.
I say this because, while I don't want this to happen, I've never seen a company that is more ripe for an acquisition than NTEK. It has the right product at the right time. However, it lacks a strong leadership team and money.
Obviously, NTEK needs more money, which is why the company is planning the RS. So, dilution is expected. And I agree 100 percent that even incredible news, followed by dilution, will not sustain the PPS. We had some pretty major announcements while diluting over the past year and look where the PPS is now.
It would be great if the company could afford to buy back shares, but NTEK doesn't have the money to do this in a way that would affect the PPS in a material way. Let's say the share price doesn't jump too much and they can buy back the shares at an average of .01 per share. This would only afford them about 100 million shares. They'd still have 1.637 billion shares outstanding and they'd STILL need to raise $8 million to $10 million for the additional content they claimed they need.
It appears the company will go through with the RS. Hopefully, it will dilute VERY, VERY sparingly, and rely on funding from a partner for the $8 million - $10 million NTEK claimed it needs for content. If NTEK leadership relies on the RS to fund the $8 million to $10 million, it would devastate the PPS. And, in that case, we might be better off, instead, selling the company for anything above 25 cents per share.
I say this because, while I don't want this to happen, I've never seen a company that is more ripe for an acquisition than NTEK. It has the right product at the right time. However, it lacks a strong leadership team and money.
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