Cyber Kiosk Systems Lowers Authorized Shares and Share Count Without a Reverse Split
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Cyber Kiosk Systems Lowers Authorized Shares and Share Count Without a Reverse Split

By: News

Wednesday, February 27, 2013

In the Over the Counter reel, share splits are pretty common. Seasoned investors have heard it all about reverse splits. The press releases are generally the same with claims of how the true value of the company is not being realized at current valuation. Of course, in many instances, those executives laying down those stagnant quotations generally fail to discuss that it was the same management team that was diluting the daylights out of the share structure that drove it to those depressed levels.

It is far less frequent to see a company actually lowering their share structure without hitting shareholders with a reverse split as in the case of Cyber Kiosk Solutions, Inc. (Pink Sheets:CYBK). The Coral Springs, Florida Company said on Wednesday that it has filed an amendment to its Articles of Incorporation with the State of Florida to reduce the number of authorized shares from 120 Million to 70 Million effective as of March 8, 2013. Further, Cyber Kiosk is lowering its total number of outstanding shares from 114.54 million to 49.54 million, but this is not being done through a reverse split.

Quick math shows that the company’s outstanding shares were nearing the amount authorized, which is generally a trigger for a reverse split or, at bare minimum, the board authorizing increasing the authorized share amount.

It’s interesting the way that Cyber Kiosk Solutions, a distributor of company-owned kiosk machines and tablets with a proprietary software platform marketed under the brand name Cyber-Thingy™, went about the move.

A true pink sheet play, the company has a “current information” designation on OTC Markets from filings its quarterly report at the end of November when it was known as Dynasty Limousine Inc. Formerly trading under the ticker “DNYS,” Dynasty acquired Cyber-Thingy. 100 million restricted shares were paid to Cyber-Thingy in the acquisition deal.

The assets of Dynasty were divested and a subsequent name and ticker change followed earlier this month.

“The reductions are made possible by an agreement made between the CEO and incoming Board members. The Authorized share reduction was a request made by the incoming Board members as was a two year restriction on the shares issued to the CEO. It was decided amongst all parties that a reduction in the number of Authorized and Outstanding shares would benefit the Company more than a two year restriction,” Cyber Kiosk said in an official statement.

Three new board members, as well as a new Chief Operating Officer and Chief Technical Officer are slated to be added to the team by March 8.

As part of the share shuffle, CEO Christopher Clarke will exchange 65 million of his 100 million restricted shares for 65 million preferred shares and a certificate for 35 million restricted shares. Without digging too deep, it would seem presumable that Clarke was the primary shareholder of Cyber Kiosk Solutions before the acquisition by Dynasty and he received the restricted stock in the deal (but, that could be inaccurate. A quick call to the company was answered by an unidentified answering machine). Preferred shares carry no voting rights, so as part of the agreement, Clarke can convert a portion of the shares back to common stock, an event occurring that makes him less than the majority holder of the company. Further, Clarke can convert his shares if all, or part, of the company is sold.

The Cyber Kiosk story is a bit of an anomaly in the pink sheet world and certainly outwardly gives the impression that the company is truly looking to build shareholder value. The float is miniscule given the insider holdings, totaling only about 3 million shares for free trading. Some additional due diligence is, as always, encouraged to see where this leads.

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