Paradigm Medical Industries Inc. (PDMI)

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PDMID - WOW look at all these Debt Notes

Their 3rd quarter report needed 16 pages just to cover all their convertible Debt Notes (from page 7 to page 23)

http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=40709

The issuance of shares upon conversion of convertible notes and exercise of warrants may result in substantial dissolution to the interests of other stockholders since the holders of the convertible notes may ultimately convert and sell the full amount issuable upon conversion. Although the noteholders may not convert their convertible notes and/or exercise their warrants if such conversion or exercise price would cause them to own more than 4.99% of the Company's outstanding common stock, this restriction does not prevent the noteholders from converting and/or exercising some of their holdings and then converting the rest of their holdings. In this way, the noteholders could sell more than this limit while never holding more than this limit. There is no upper limit on the number of shares that may be issued, which will have the effect of further diluting the proportionate equity interest and voting power of holders of the Company's common stock.

The number of shares of common stock issuable upon conversion of the convertible notes issued on April 27, 2005, February 28, 2006, June 11, 2007, December 19, 2007, December 24, 2007, June 16, 2008, August 29, 2008, October 19, 2009, November 13, 2009, and April 19, 2010 is determined by dividing that portion of the principal of the notes to be converted and interest by the conversion price. For example, assuming conversion of $2,161,475 principal amount of the convertible notes on September 30, 2010 (consisting of $5,665,388 in convertible notes that were sold to the accredited investors pursuant to securities purchase agreements dated April 27, 2005, February 28, 2006, June 11, 2007, December 24, 2007, June 16, 2008, October 19, 2009, and April 19, 2010, plus $389,010 in convertible notes issued on December 19, 2007, $191,913 in convertible notes issued on August 29, 2008, and $371,007 in convertible notes issued on November 13, 2009 in payment of past due interest on the notes, less $4,455,843 in principal of the notes converted during the period from June 12, 2005 to September 30, 2010) and a conversion price of $.0001 per share with a 55% discount, the number of shares issuable upon conversion would be:

$2,161,475/$.0001 x 45% = 48,032,777,778 shares


This thing could be back up close to 20 Billion Outstanding shares in a little over a year and the share price back down close to $.0001 by then too.

Buyer beware on this one