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Tuesday, August 15, 2017 9:46:24 AM
PGUS I thought it might be helpful to explain how/why the price manipulation can be done, using dilutive MM's like VNDM. As I write this, we have 144 board followers, and there are probably many more reading the board but not following. My guess is, there are more than a handful that are not familiar with this.
First, from everything put out by ProGreen in PR's and blogs - and filings - this has been no conversions, and we are told that there should not be any conversions of these notes - the company will pay them off in cash before conversion, they are being used for bridge financing only. The proof is in the actions and reflected in the financial reports, and the O/S essentially unchanged over the past year+ verifies this.
But the note holders don't know this, they don't care what the company says, they only hope that they'll get the chance to convert and make profits hand over fist. Here's how it works.
Convertible notes have terms for conversion price like this - "lowest price traded within the prior 20 tradings days" or "average of the 3 lowest trading prices within the prior 30 trading days". And they get their discount from THAT number.
So if, as in the first chart below, the price touched 0.0003 within 20-30 days prior, the note holder can convert at 0.00024 if the terms included just a 20% discount. Often, it will a much better discount, like 30-50%. So they already have a really great price (for their own interests). Now, if the price was REALLY undervalue to begin with - due to manipulation tactics or for any number of reasons, the note holder is very happy - they can convert at any time when the price is at the low 0.0003, or within 20-30 days afterward, and begin selling when the price has climbed substantially. On the 1st chart below, the note holder could convert with a price of, say, 0.00024, and then sell at an average price of, say, 0.0050 for aabout 20x gain. Converting just $10K, they turn it into ~$200K. Not bad. The note holder is fat and happy.
Now look at the 2nd chart. The price is high and holding steady for long periods of time. A note holder is going to want to print some low prices, so they can buy at an even steeper discount. They're in the convertible note business because they want short-term, high gains - as soon as they can get it. They don't care what's going on with the company. All they know, and all they care about is, their note is coming due and they hope they will be able to convert... and so they come out with some shares using a dilutive market maker to scare the price down, or at least hold it down in order to build upward price pressure. If they have no shares to start with, you'll see the MM on the bid, picking up a few shares maybe 3-5 weeks before the 6-month anniversary of the funding of the note (when Rule 144 shares can be sold / have the restricted legend removed). Once they have a few shares, they can sit on the ASK and apply downward price pressure, in the same way that flippers will put up ASK blocks to try to get their low bid orders filled. Only, the dilutive MM isn't trying to fill a bid - they just keep dropping the price without selling their limited shares... until the note holder can convert.
First - This doesn't work if longs are "in the know" and take out the MM, knocking them off the ask.
Second - If no conversion ever materializes, as is expected with PGUS based on company comments and past history / proven by the non-changing O/S, then it's all for nothing and the only results are 1) a handful of unknowing shareholders got shaken out, and 2) the company may feel some negative impact from its share price being manipulated downward and/or held low.
Almost all convertible note agreements have verbiage stating that the note holder cannot/will not short the company stock, yaya, yada. This is not technically shorting, probably perfectly legal. It is CLEARLY "price manipulation", but just try to get that to stick. It's just a fact of life in the stock market, and best to understand it.
Chart 1
Chart 2
First, from everything put out by ProGreen in PR's and blogs - and filings - this has been no conversions, and we are told that there should not be any conversions of these notes - the company will pay them off in cash before conversion, they are being used for bridge financing only. The proof is in the actions and reflected in the financial reports, and the O/S essentially unchanged over the past year+ verifies this.
But the note holders don't know this, they don't care what the company says, they only hope that they'll get the chance to convert and make profits hand over fist. Here's how it works.
Convertible notes have terms for conversion price like this - "lowest price traded within the prior 20 tradings days" or "average of the 3 lowest trading prices within the prior 30 trading days". And they get their discount from THAT number.
So if, as in the first chart below, the price touched 0.0003 within 20-30 days prior, the note holder can convert at 0.00024 if the terms included just a 20% discount. Often, it will a much better discount, like 30-50%. So they already have a really great price (for their own interests). Now, if the price was REALLY undervalue to begin with - due to manipulation tactics or for any number of reasons, the note holder is very happy - they can convert at any time when the price is at the low 0.0003, or within 20-30 days afterward, and begin selling when the price has climbed substantially. On the 1st chart below, the note holder could convert with a price of, say, 0.00024, and then sell at an average price of, say, 0.0050 for aabout 20x gain. Converting just $10K, they turn it into ~$200K. Not bad. The note holder is fat and happy.
Now look at the 2nd chart. The price is high and holding steady for long periods of time. A note holder is going to want to print some low prices, so they can buy at an even steeper discount. They're in the convertible note business because they want short-term, high gains - as soon as they can get it. They don't care what's going on with the company. All they know, and all they care about is, their note is coming due and they hope they will be able to convert... and so they come out with some shares using a dilutive market maker to scare the price down, or at least hold it down in order to build upward price pressure. If they have no shares to start with, you'll see the MM on the bid, picking up a few shares maybe 3-5 weeks before the 6-month anniversary of the funding of the note (when Rule 144 shares can be sold / have the restricted legend removed). Once they have a few shares, they can sit on the ASK and apply downward price pressure, in the same way that flippers will put up ASK blocks to try to get their low bid orders filled. Only, the dilutive MM isn't trying to fill a bid - they just keep dropping the price without selling their limited shares... until the note holder can convert.
First - This doesn't work if longs are "in the know" and take out the MM, knocking them off the ask.
Second - If no conversion ever materializes, as is expected with PGUS based on company comments and past history / proven by the non-changing O/S, then it's all for nothing and the only results are 1) a handful of unknowing shareholders got shaken out, and 2) the company may feel some negative impact from its share price being manipulated downward and/or held low.
Almost all convertible note agreements have verbiage stating that the note holder cannot/will not short the company stock, yaya, yada. This is not technically shorting, probably perfectly legal. It is CLEARLY "price manipulation", but just try to get that to stick. It's just a fact of life in the stock market, and best to understand it.
Chart 1
Chart 2
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