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IntelliCell BioSciences, Inc. Message Board

  • yousef_razzaq Jun 26, 2014 6:15 PM Flag

    An increase in Authorized shares does not always mean Dilution!

    Here is a simple understanding of Authorized shares increases:

    Here’s a simple example with numbers to illustrate the relationship of these different shares:

    Authorized Shares – 100
    Unissued Shares – 20
    Restricted Shares – 10
    Float – 70 (100 – 20 – 10 = 70)
    Outstanding Shares – 80 (10 + 70 = 80)
    Why is this Important?

    Here are several key bits of information you can determine from looking at how these different share types stack up in relation to each other:
    Look at the relationship of unissued shares and restricted shares to float for where controlling interest of the company will reside. Many companies retain a large percentage of the authorized shares in their treasuries or in the hands of management through restricted shares.
    Companies do this to make sure no other company can seize control in an unfriendly takeover. They may also want to have stock handy for future issue instead of using debt to buy another company or for another major expenditure.
    Controlling interest held in unissued stock means outside shareholders will have little influence over the decisions of the company.

    Basically, to sum it all up, they could be doing this a measure to protect themselves from hostile takeovers. The A/S does not mean DILUTION as it has no effect on the market cap or FLOAT. However, if it was OUTSTANDING shares, then that would mean dilution... Which we have not received any information on as of yet. Therefore, the panic selling was really silly as this was just a misunderstanding and panic fear created from shorts signalling the world was over LOL. Finance 101 here folks.

    Sentiment: Strong Buy

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    • Clear, basic information about authorized shares. There are certainly good reasons for this request, but also some worrisome ones. In the case of SVFC the request for 10 billion AS raises at least a yellow flag IMO.

      While not actual dilution, the prospect of triple the number of shares is not a happy one for current shareholders. The Investopedia article on "Authorized shares" states: "One reason an investor might want to know how many authorized shares a company has is to analyze the potential for stock dilution. Dilution reduces a stockholder’s share of ownership and voting power in a company and reduces a stock’s earnings per share when new stock is issued. The larger the difference between the number of authorized shares and the number of outstanding shares, the greater the potential for dilution."

      Given SFVC's history the shares might be used for purposes that will limit gains in the PPS.

      Sentiment: Hold

    • LOL, Finance 101?
      How about Pump & Dump 101?
      Turn paper into cash, paper to cash, and more paper into cash while the shareholders/bagholders turn cash into paper, cash to paper and more cash into soon-to-be worthless paper!

      Sentiment: Strong Sell

    • How many successful companies have 10 billion A/S utilized or not? What would their stock value be? FNMA does not have it and they have incredible revenues that can't be used.

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