Number of shares

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willi...@aol.com

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Sep 6, 2007, 9:52:37 PM9/6/07
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I have read that typically a million shares are issued initially for
an idea only corporation, as a rule of thumb. If the business is well
beyond the idea only stage and has products ready to be shipped, how
much shares should the business issue?

To me though, as long as the percentage of the business that the
shares represent is the same, the number of shares is immaterial. Are
there any implications that I am missing?

Thank you in advance ...


NC

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Sep 7, 2007, 5:50:22 PM9/7/07
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On Sep 6, 6:52 pm, "william...@aol.com" <william...@aol.com> wrote:
>
> I have read that typically a million shares are issued initially for
> an idea only corporation, as a rule of thumb. If the business is well
> beyond the idea only stage and has products ready to be shipped, how
> much shares should the business issue?

As many as necessary to accommodate investors in all foreseeable
rounds of financing. Note, however, that you are not making a
distinction between authorized shared and issued shares, and you
should...

> To me though, as long as the percentage of the business that the
> shares represent is the same, the number of shares is immaterial.
> Are there any implications that I am missing?

Yes; the future IPO. NASDAQ regulations prohibit offering shares in
an IPO for less than $5 per share; at the same time, offering shares
at above $100 per share is often thought to be impractical (shares are
traded in blocks of 100, so offering shares at above $100 per share is
thought to alienate small investors who cannot afford to open $10,000
positions). Since most IPOs comfortably fall within $5-100 million
range, million shares appears to be a very good number.

Cheers,
NC


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