US Stem Cell Inc (USRM)

[Dragon Lady]

"That would be some pretty bad business plan for Magna if what they do is destroy companies like all of those on that list."???

Actually, it's quite the opposite- it's some of the biggest, fastest, easiest money a firm can make. Lending to cash desperate companies can, and often is more lucrative than having a magic, ATM money printing machine IMO. Firms like Magna, Asher and similar can make 200%, 300% or more ROI on their money, often in 6 months or less. Show any other industry (even hedge funds) that can produce returns like that on their money? High risk, mega high reward, and legal too boot.

I ran down a fair number of the companies on that list- and it's fugly ugly to say the least. A great many with 2 or 3 zeroes after the decimal point. Down from 10 cents or 5 cents a share or whatever, now showing prices like .003 or whatever and market caps in the $100's of thousands of dollars in several cases, and I saw several with many, many BILLIONS of shares outstanding and/or on their 2nd or 3rd reverse split. One can look the at every company on that list for them self- it doesn't take someone else to do it.

As Bigal pointed out- there's also a right hand column that lists the super crash and burns, the one's that completely have dropped off even the ability to trade the OTC.

I pulled up some charts on several of them, their decline was rapid, often 6 months maybe, perhaps 1 yr tops, from pennies per share, to as stated, multi zero's after the decimal or what Bigal called approaching "par".

This is all just public info- no mysteries here. I-HUB members who put a list like that together were able to discover that largely, one common denominator seemed to follow all those stocks and then their rapid decline- and that was they did "financing deals" with Magna, and in many cases other deals with the likes of Asher and similar firms tacked on too boot.

Is it a 100%, hard fast rule that any company involved with Magna and Asher ends in double or triple zeroes? Of course not, no one can prove that. But is there a lot of data that says it's certainly a high risk to use them for financing and that they seem to have a "knack" for creating deals, where the lower they can make the share price go, the more shares they get to convert, then make the share price go lower, then convert more, literally making more and more money for themselves, the lower they can make a share price go, literally often to even zero essentially.

Just the way it is. There's too many observable case studies presented to say it doesn't happen or isn't common. Even the SEC and many other firms/agencies warn about how convertible debt and these particular type of dilutive financing deals work exactly like these scenarios.

I don't think it's by chance that Manga first did a steeply discounted "note" deal with BHRT first, then set up the terms of the credit line. IMO, and just a guess, they're gonna "work um" in tandem, as a pair. That's my opinion. No accident IMO, they did two deals with BHRT, two particular types of "financing' done back to back, within weeks, or even days of each other. Why would they do it that way? Unless there is a reasoning behind it?

My 2 cents.

http://www.sec.gov/answers/convertibles.htm

http://investorshub.advfn.com/~-ASHER-~-25451/

http://securities-law-blog.com/tag/convertible-promissory-notes/

Convertible debt explained:
"The convertible note will set a conversion price which is negotiated between the lender/investor and borrower/public company at the time of issuance. Generally, the note is convertible into common stock at a discount to the market price of the stock at the time of conversion. In my experience, the negotiated discount can vary widely. A public company with greater liquidity, strong market support, strong financial statements, and the like would be in a position to negotiate a smaller discount such as 15-25%, whereas a public company without these benefits may have to agree to a much higher discount such as 35-50%.

Although this type of financing serves many purposes in the capital markets and is fairly easily obtained, small public companies should be aware of the disadvantages. For instance, a convertible promissory note which is partially converted or converted in tranches has the tendency to drive the price of a security down while exponentially increasing the amount of stock in the public float. For example, if the security is priced at $1.00 and the lender/investor converts $10,000 of debt and immediately sells those securities into the public market, that very selling pressure may drive down the price. When the lender converts the next $10,000 in debt at a lower price, say $.80, they would get more common stock to cover the same amount of debt. Upon selling this stock, again, the selling pressure would drive down the price. as the lender/investor continues to convert into more and more stock to cover the same amount of debt, and sell such stock, the price would be driven down further and further. Moreover, the amount of stock in the public float would continue to increase, resulting in dilution to the current shareholders and making it much more difficult for the same stock to see an upward movement in its price. "

Another explanation of convertible debt from the SEC site link above:

"By contrast, in less conventional convertible security financings, the conversion ratio may be based on fluctuating market prices to determine the number of shares of common stock to be issued on conversion. A market price based conversion formula protects the holders of the convertibles against price declines, while subjecting both the company and the holders of its common stock to certain risks. Because a market price based conversion formula can lead to dramatic stock price reductions and corresponding negative effects on both the company and its shareholders, convertible security financings with market price based conversion ratios have colloquially been called "floorless", "toxic," "death spiral," and "ratchet" convertibles.

Both investors and companies should understand that market price based convertible security deals can affect the company and possibly lower the value of its securities. Here's how these deals tend to work and the risks they pose:

* The company issues convertible securities that allow the holders to convert their securities to common stock at a discount to the market price at the time of conversion. That means that the lower the stock price, the more shares the company must issue on conversion.
* The more shares the company issues on conversion, the greater the dilution to the company's shareholders will be. The company will have more shares outstanding after the conversion, revenues per share will be lower, and individual investors will own proportionally less of the company. While dilution can occur with either fixed or market price based conversion formulas, the risk of potential adverse effects increases with a market price based conversion formula.
* The greater the dilution, the greater the potential that the stock price per share will fall. The more the stock price falls, the greater the number of shares the company may have to issue in future conversions and the harder it might be for the company to obtain other financing."