NYBD Holding Inc (OTCMKTS:NYBD)’s Surge Continues, A/S Count Reduction Announced

NYBD Holding Inc (OTCMKTS:NYBD) started the week on an extremely positive note. On Monday, it managed to jump up by as much as 50% while shifting more than $438 thousand worth of shares. Apparently, it had enough momentum to continue going up yesterday.

In a matter of six and a half hours, investors traded more than 518 million shares which resulted in a dollar volume of around $471 thousand. NYBD gained another 44% and finished the session with a price of $0.0013 per share. If the O/S count in the latest 10-Q is to be believed (on May 15, there were a little under 1.1 billion shares issued and outstanding), the market cap right now should stand at around $1.4 million.

That seems to be a bit of a stretch for a company that is not really in a terrific financial shape. As we mentioned yesterday, NYBD ended the first quarter of 2014 with just over $1 thousand in the bank, $3 million in current liabilities, and no revenues.

$1.4 million also seems like a lot of money for an enterprise that uses a virtual office as the location of its headquarters and it’s also too much considering the broken promises from a couple of months ago. In November 2013, they were projecting $250,000 in revenues for the first quarter of 2014, but in reality, the Q1 report stated that they’ve only recorded “a few sales in the online store”.

As you can see, there’s no shortage of things that could depress the price and that’s without even mentioning the myriad of toxic notes that have been diluting the stock for so long. Nevertheless, investors are preparing for another green session today.

The reason for this is, of all things, a post on Facebook. It was released by NYBD‘s management team and it informs us that they want to reduce the number of authorized shares by 1 billion. Judging by the unusual amount of buzz around the discussion boards, there are a lot of people who reckon that this is the end of the devastating dilution. Others, however, are not convinced and there are some good reasons for their skepticism.

NYBD said on their Facebook page that all the documents for the reduction of the A/S count have been filed and are awaiting approval. Yet, for reasons that are not very clear, they failed to mention what the number of authorized shares will be after the amendment. Naturally enough, we decided to do some digging around and see if we can get to the answer.

NYBD‘s share structure went through quite a few changes over the last couple of months. At the beginning of 2014, the A/S count stood at 750 million. On January 14, they increased it to 1.5 billion and “subsequent to March 31, 2014”, they raised it once more to 2.5 billion. All this information is available in the latest report and since its publishing on May 15, the company has made no announcements about changes to the authorized capital.

If, however, you take the time to go to Florida’s Secretary of State’s website, you’ll see that on May 16 (around twenty-four hours after the publishing of the 10-Q), NYBD filed another amendment, this time increasing the A/S count to 4 billion shares.

Perhaps the most worrying thing of all is that they did this without issuing either a press release, or an 8-K form. They didn’t even update their Facebook status. If they really reduce the A/S count now, it will stand at 3 billion shares, but considering the horrifying amount of convertible notes still outstanding, they might need to raise it again really soon.

Dilution is a problem that should not be underestimated. The chart on the right belongs to Medient Studios Inc (OTCMKTS:MDNT) and if you’ve been reading through our articles, you’d know that their printing press has been working overtime over the last few months. The effects on the stock have been horrific and things are about to get worse. A few minutes before today’s opening bell, MDNT received a suspension order due to “questions regarding the accuracy and adequacy of publicly available information about the company”.