Correct the shares come based on the discounted price so = more shares than if you used the current trading price.
Lots of experience with Convertible notes like this. Last company I watched went from 160 million market cap , 1.60 stock price or so and 40 million shares outstanding to .0001 stock price, 4 billion plus shares outstanding.
I think some of the analysis here is correct but you are missing the bigger picture..
That is
1- Part of the reason this started moving up was the thought (and about 100 posts by people) that the Convertible (the old one) was finally done, clearing the path for this to move up. Now we see there is a new convertible.
2- Convertibles (now that you are seeing your second one here) are like crack. Management stock is probably already diluted to almost no value so they have not much to lose (example say an owner/officer had 200 thousand shares once worth 10 bucks for 2 million, now its worth 8,000 and equity loss of value is not a big issue for insiders thus) so , trying to keep the ship afloat (no pun intended) they just keep issuing them. The problem only gets worse and worse as this activity lowers the price and interest in the stock so the amount of shares grows.
3- The moving/changing valuation picture.. Example, up the top of this board everyone saw the 7 buck and change calculation. By the time the first convertible ended it was 2.38 cents or something, and this is using book value not the correct fmv of assets less liabilities as is presented at the bottom of the info at the top of our posts. Using this info the value has dropped precipitously as well. 72 million over say a total of 140-15 million shares is about where you might be.
4- The notion that operations are turning around is somewhat tossed on its head by the need to do another convertible note like this, especially since it is only 250k. Just think about that for a second the 0/S stock created from the first note brought the os from 30 million to over 90 million probably over 100 million. Essentially that is a crazy amount of stock for so little money.
The biggest problem is the notes do not stop coming, they look at it as free money since their insider stock is already next to worthless already. Once you get by this one (the other one just ended and this popped up), you might see another one.
6 million shares may not seem like much but when they keep coming that is the problem.
A recent stock that had a nice run launched 6 million from a convertible preferred and knocked the stock from 15 cents to 5 cents, it took a month to bounce to around 7-8 cents.Now it it was a 1 and done thingy people would move on, but then another 2 million came out and there is potentially more to "hatch" from that preferred. Totally sucked the wind out of the stock.
Remember these are all "to be sold" shares, so you add these sellers in with those what had profits looking to sell and instead of a market skewing upwards you get a downward spiral (prices decline, others panic etc..).
This type of note using a loophole was never really meant to be done this way and as you know just sucks the life out of stocks that are cash starved. SO it is very rare you see a legit turnaround without the company taking the cash value away from shareholders, which is essentially what is happening. In other words why let a stock appreciate and make shareholders money when they can essentially take that appreciation for themselves by using convertible notes.
Someone was mentioning a Kyros note before this news posted, I asked about it (check my prior posts if you have that feature). Did they have a note like this before?
In any case I have a modest position I am up on but I do feel it will be a rocky road as what some people seem to forget is that even if they did not convert a single share the price could still go down just from the announcement this new problem is out there.
This is just my opinion on things having seen these at work before.
Good luck to everyone
