I’ve had at least a dozen people ask me what I thought about the reverse split. (Disclaimer: I’m still a shareholder and have been since October 2016. I obviously reserve the right to buy, hold, or sell at any point based on my financial strategy. I have not been compensated in any way, shape, or form to write this blog or any other blog — ever.)
First of all, it’s important to point out is a proposed reverse split and hasn’t been voted on and approved yet.
Second, it’s very important to pay attention to the text in the Schedule 14A where it says “at any ratio up to 1-to-500″.
If you’ve actually been paying attention to OWC, as I have, you would know they’ve been interested in cross-listing and up-listing on other exchanges. Example: “we are evaluating the possibility of cross-listing our stock on additional exchanges to increase trading liquidity as well as to facilitate our ability to raise capital to enhance our development and commercialization efforts.” is wording from the Chairman’s Letter to Shareholders on 9/14/2017.
Do I feel they should do a Reverse Split?
I believe if they have some really good news (i.e. Licensing deal to finally start generating revenue from the Topical Cream or partnership to research with a big pharmaceutical company) and truly want to uplist to NASDAQ, they should definitely consider a light Reverse Split. Nowhere near 1:300 or 1:500. More realistic ratios are 1:25 or 1:35 because then they need a $17M – $25M market cap to maintain $4.00 per share — which, technically, there are listing options that allow for a Bid/Closing Price of as low as $2.00. Most of these options require at least 1,000,000 shares outstanding as well. See for yourself.
The OTC is full of trash companies that run their outstanding shares to several billion, do a wicked reverse split, and continue to run the share count. It’s the only way some of these companies can actually raise money when they’re pre-revenue.
Doing literally less than 2 minutes of searching on Google, I found MKGI and BSGM did a (minor) Reverse Split and uplisted to NASDAQ. So, it’s not impossible as some OTC Doomsday traders want you to believe. But, again, the OWCP reverse split has not been approved and I can almost guarantee it won’t be for anywhere near 1:300 or 1:500, as I feel Dr. Stanley Hirsch (Chairman) and crew are intelligent people.
The fact is, OWCP has not been wickedly diluting like most of the ‘OTC Trash’ I refer to above. You can look back at past 10-K’s and see for yourself. For fiscal year ending 12/31/2017, OWCP had 147,758,908 shares outstanding. That’s only an increase of 9,000,000 shares in 14 months!
Those are the facts — which you can verify for yourself. If you’re thinking about buying or selling, I encourage you to verify all claims for yourself. Friday had a lot of panic selling. I, for one, decided I had to buy at $0.052. Time will tell if it was a mistake, but again, based on the information I have available to me — I just don’t see OWC voting for a crazy reverse split anywhere near 1:300. I strongly encourage them to consider ratios a lot closer to 1:25, but even then they need to give us some sweet, sweet news so people can have confidence.