Ann: Trading Halt, page-11

I can't speak for anyone else, but whenever a company I hold shares in has had a share reconstruction I have always ended up in a materially poorer position, always!

It's no use saying 'if people believe in the company the market cap should stay the same and post consolidation the price should hold' as that is all theory with zero reality. If people don't believe in the company now and clearly they don't then a share reconstruction isn't going to change that negative sentiment, after all share reconstructions are no silver bullet. In reality they are a smokescreen for poor management and failed companies' attempts to do some window dressing when the fundamentals of the business have not changed one iota.

There is no option but to get the runs on the board. Revenues, profits and then share consolidation if it is still necessary at the time, in that order with no ifs or buts. Rushing in to a share reconstruction prior to getting the runs on the board has dire consequences for holders.

I'll give you an example. A stock I held earlier this year underwent a 1:28 share reconstruction and despite a very brief initial increase in share price post consolidation it has been in a downward spiral ever since. My initial investment was $8000. Recognising the danger of share consolidations prior to revenues and profits being recorded I soon sold out (at a loss of $550). That wasn't flash on my part as I was a little slow to sell (and I shouldn't have invested that much to begin with), but had I continued to hold to today my original investment of $8000 pre-consolidation would now be worth $141 post consolidation.

If that is not a cautionary tale for investors in the danger of companies consolidating their shares before generating revenues and profits then I don't know what is.

In light of the above I am now holding a small number of shares and I have no intention of spending another cent until the company starts generating revenues and profits. That will not change in the event of a share consolidation as the situation hasn't changed one iota with the exception that you'll be holding far fewer shares - the company still needs to generate revenues and profits to gain investor confidence and therefore more investors.

If people aren't investing now as the proponents of share consolidations claim then I don't understand what makes them think people will suddenly start investing in it post the share consolidation as the underlying business hasn't changed at all. It still hasn't generated adequate revenue and hasn't recorded the necessary profits to generate sufficient interest in the investment community to justify them parting with their hard-earned.

The argument that people will invest at 20c and not at .002c doesn't wash because at the end of the day people won't invest in companies that don't generate revenue and profits. That goes for both ends of town, big and small alike.