Jackals...

A reverse split can be a "double-edged" sword. If a 1:5 SPQ split happened tomorrow, it would take an investor's 10,000 shares down to 2,000 shares, and raise the share price from .11 to .55 .

No one loses any capital; however, as you have implied, shareholders are rarely happy with such a strategy. 10,000 always looks better than 2,000. Right?

For contrast, perhaps I could suggest a 2:1 split (the other way - Lostlips would kill me for suggesting this!), which would raise the number of outstanding shares to 560,000,000, my 10,000 shares to 20,000 (does this look better?), and my share price would be .055 cents.

So as far as individual investor psychology is concerned, it's better have more shares at a lower price per share. However, as far as the brokerage houses are concerned, they're not interested in "chicken feed share prices".

Here's a question: How many analysts are covering SPQ? Zero. Zip. Nada. How many are covering NOT? Sorry, I can answer that one, but probably the same number as SPQ.

Another point about "reverse splits" that I have observed: generally when a reverse split is approved by shareholders, after the new share price is reflected on the TSX, there is the tendency for the share price to slide. Although NORTEL is not a great example, it did a 1:10 reverse which took it's share price from $2.70 (approximately) to $27.00. It hung around that price for a while but soon started to slide. However, everyone knows about Nortel. (I certainly do. I worked for them for 17 years.)

Finally, this is all conjecture. What I'm really interested in is the upcoming aerial survey. Reverse splits are "playing with numbers." I want to know about the "good stuff" in the ground. This is what will make our 2008 Xmas party really happen.

Snug

Snug