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I own a few hundred shares of USHG. This morning USHG announced a merger with a Ionatron, a privately held "development stage company". The announcement went on to say:
"Pursuant to the merger agreement, Ionatron stockholders will be issued an aggregate of approximately 65% of USHG's outstanding common stock, on a fully diluted basis, in exchange for all outstanding shares of Ionatron common stock. Current USHG shareholders will continue to own apporximately 35% of the combined companies after the merger".

My questions are as follows:

1. Can anyone define what a "development stage company" is for me?

2. What is meant by "issuing stock on a fully diluted basis"?

3. Since Ionatron is a privately held company, how can I assess how their performance has been?

Thanx,
Bob, Long time fool, first time poster.
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1. Can anyone define what a "development stage company" is for me?

A development stage company is usually one that has not generated much in sales but has spent money developing a product, idea, and infrastructure, and also has a lot of growth potential. But usually is operating with little to no sales and a taking losses every year.

2. What is meant by "issuing stock on a fully diluted basis"?

If you look at a company's income statment you can find two items under Net Income, basic shares outstanding and diluted shares outstanding. The diluted shares outstanding refers to the basic shares outstanding plus all shares that "could" be outstanding if all the warrants and options for that stock were exercised (e.g. if employees exercised their employee stock options more shares would be outstanding which "dilutes" everyone elses ownership."

3. Since Ionatron is a privately held company, how can I assess how their performance has been?

Sometimes the target company's historical financials will be included in the company's next 10-k or another public filing, but only if the acquisition impacts the acquiring company's financials significantly.

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