No one disagrees on the math of Split (or Reverse Split). Everyone knew it!. The concern is the common "side effects" often associated with RS and its risk/benefit trade-off. In the case of TKOI RS, the float of shares will reduce from current 130mil to about 6.5mil (say, 20 for 1). That means:
1) Volatility: The share price will be more volatile because there are only a limited number of shares and share holders. This could go both ways: sharply up, or down. For TKOI, because its revenue declined last year Q3 and Q4, one would expect its share price will go down sharply than without RS.
2) Liquidity: The institutional investors prefer to invest in stocks with a large float as it is more liquid, and they can buy and sell large amount of shares easily. RS will reduce the float size and might push away some potential block buyers. Even tkoi can get itself listed a big exchange, but large investors can't find enough shares to buy/sell.
3) Bid-ask spread: The spread is normally wider for volatile stocks, where brokers makes more money from investors.
4) Loss of Small investors: Higher share price will push away some individual small investors because of affordability. All penny stock investors will be gone.
5) Leverage effect: lower priced stock often moves up faster than higher priced stocks; Hi-priced stocks often move down faster then lo-priced ones. A +$0.01 move of $0.20 stock is 5% increase, but only 0.25% increase for a $4 stock. One theory is that lower price stocks might have more potential buyers, which can slow down share price decline on a down market.
6) Reputation: RS has negative impact of any company's reputation, on both investors and customers. Many fund managers just won't buy any RS stocks. This negativity might even drive away some potential customers.
Too much risks, not enough benefits, IMO.
I have to give the old BOD a credit that they were smart enough NOT going thru the RS last year. Imagine if they did a RS, say 20 to 1 to get above $4/sh, TKOI then immediately had two consecutive revenue drops in 2015 (Q2=4.755, Q3=4.055, Q4=3.696), our share value would be much below $4.00 again. We would had a much bigger loss than without RS.
2016 Q1, for the first time in many years, TKOI's "Slow" season was NOT slow. Its Q1 revenue of $4.625 was impressive. Their traditional slow season was actually busier than a busy season. When a company eliminates its slow season, it is a sure sign of upcoming growth. (unless they cooked their book.). Hope TKOI will stay busy in their busy season going forward.
Amazing! More than 60% of shareholders were against RS. They were certainly a "silent majority". If one just listened to this message board, you would think most people were for RS..... I am definitely going to vote in Nov again as I might just pick another winner. LOL.
We have Echo and Nest. Wish one day they will talk to each other...And it would be nice if hotel customers can use their home commands (Alexa,....) to control hotel room temperature too, so they don't have to learn different commands.
Got it! Seems a Less of two evils? $250k is what you don't like Kross, But it does not explain your statement of " the board I am against". I will voted after reading your Kross post, but still wondering what changed your heart....
I agree that TKOI is too small for this type of operation initially (that is why everyone is hoping for a buyout now), but if it can get couple of thousands rooms installed, it will get the snowball rolling.
$12-20 per room per year is more of an "annual license/support" type of money. But I am talking about "Profit sharing" money. For example, If a hotel owner can save, say $500/year/room, from using free-installed TKOI system, he would be happy to pay TKOI $250/yr, still a pretty good deal for him (no out-of-pocket money). Instead of taking a commercial loan from a bank for the initial install, he just use TKOI as his "bank". After 3-10 years, he will get the TKOI system free....
As a longtime shareholder, I always wondered about TKOI's business model. Their technology is fine and battle-tested. There seems no operational problem at the company and there are plenty of market for its technology. But their business model is basically just making money once by selling hardware and some installation fees. This is no difference from what IBM was doing selling desktop computers 20-30 years ago, and they found out later they can't make living on that. Selling energy saving equipment is one-time business, but saving energy is forever. What TKOI should do is linking their business to their clients energy saving money. One possible model is to install the system "free" of change to any hotel owners who wants it, then share with them their energy savings for long period of time. Almost the same deal as many of the solar panel companies are doing (free panel free install, homeowner saves some, company makes some). This will turn TKOI from an utility installation company into a "banker" type of business, making money based on loans. TKOI might want to take a look at Adobe's business model, not selling software, but subscribe software out (Adobe CC), making money on monthly payments forever.
Hope we can have a new BOD who can think outside the box, not spending their time thinking how to fake the share price with RS. Thanks for reading. Sorry for such long message....... Just a thought, (please do not analyze my motive/agenda.)
Don't see any of the new ones as options when voting online....... only see these 5: William Davis, Jason Tienor, Tim Ledwick, Kellogg Warner and Jeff Anderews....Anyone can help?
People have different reasons investing in TKOI, regardless if they agree with management's decision to push for a split (or a reverse split). Some might be hoping for a buyout/merge, some might be using short as a way to make money, other might just based their action on technical. Decision of sell or buy is a personal decision and it is not for you to say. We are discussing if RS is a good strategy for TKOI. Analyzing commentator's "personal agenda" are NOT the purpose of this board. What if we start to say "Maybe you work for TKOI management, or are a CEO's in-law, and tried to push their opinions onto innocent investors...", or "maybe you are pumping TKOI so you can sell your shares at the expense of other fellow investors....", or "maybe you works for a potential takeover company trying to push RS so you can take over TKOI for cheap".....should we stop here? Do you prepare to analyze everyone's agenda when they leave a comment on this board? As a mater of creditability, do you prepare to sell and leave if there is no RS, even you believe it now grows faster than FaceBook? Stop analyzing everyone's agenda, lets discuss issues.
A big benefit, you forgot to mention is that when TKOI drops, say 50% after the RS, those who believe there is nothing wrong with the company's operation and its business model, it presents a buying opportunity. The aversion proves to be irrational. The investors abandon the stock will forfeit their profit for those who stay around, then it can be potentially quite lucrative.
Another benefit would be the TKOI dropped so much after RS that it becomes more attractive to be bought/merged. But how much we as legacy investors will benefit from it remains to be seen.
"...According to a 2006 paper that looked at 1,600 reverse-split stocks between 1962 and 2001, such stocks substantially underperformed the overall market during the three-year period following the reverse split -- by an average of 1.3 percentage points per month....". That is about 15% yearly!
Citi stock dropped from $46 to $25 after its 10-to-1 RS. Using RS to get onto big exchange might get some investors/analysts interests, but can also scare away other investors thinking there is some operational problem with the company.
"Stocks that choose to undertake reverse splits brand themselves with a red flag. Given their reputation as wealth-killers, reverse splits simply drive away many investors from ever considering a given stock."
Hope TKOI will be one of the exceptions.
FYI. Use NASDAQ as an example, It requires no less than $4.00 bid price and at least 1.25million shares. Which translate to no less than 20 for 1 and no more than 100 for 1 RS for TKOI.
Indeed, a small technology of automatically turning on and off AC can save a lot of money for hospitality industry. It is sad that TKOI could not leverage it to make money for its investors, so far.
If Middle East orders are significant for TKOI, it should not have "slow seasons" anymore. Middle east has different seasons and it is HOT there all year around. Up until now, TKOI still idles about 50% of its production capacity during US winter season. Lets see what happens in 2016, fingers crossed.
the "minimum" requirement is not only on share price, but also on floats. RS will reduce number of shares, which can also lead to delisting.
Do you have any facts for your statement of tkoi is "growing faster than fb"? If it is indeed true, is that another reason TKOI does NOT need RS? Facebook had 3 splits in 6 years (1-to-4, 1-to-4 and 1-to-7) because it grows truly fast! I had this TKOI for some 10 years and now facing another RS instead! And just a FYI: FB didn't rely on RS to get onto the big board so some analysts can notice it.
BTW, the tone of you posting is not healthy for this board, much like a school yard bully. Anyone disagrees with you during a discussion, do you always ask them to sell shares and leave? Do you always call people stupid when they have different opinion? You need to calm down, young man.
RS also shows that a company can NOT grow itself organically, and has to result in share price manipulation. Many companies ended up with even larger price drop following their RS, because their revenue continue to drop. If Jason took the RS route, all he said in CC about company is growing fast goes down the toilet. The investors on those "big" exchanges are not stupid. In this internet age, you don't need to be on any exchange (big or small) to be noticed, if you are REALLY good... IMO