Drone Services USA Inc. (DSUS)

[Cassandra]

No one is "shorting" VDSC or any other sub-penny stock. Are you aware of FINRA rule 4210 which includes margin requirements for shorting stocks? For penny stocks, $2.50 per share needs to be maintained in a margin account (see quoted excerpt of rule below).

Do the math and consider a cost/benefit analysis. To short a million shares @ $.0020, you would need to have $2.5 million in a margin account. Let's say you buy to cover @ $.0012. You would have made a whopping gross profit of $800 by tying up $2.5 million in a margin account. The broker also charges interest and commissions that reduce your gross profit. If the stock does not drop to allow profitable covering or if it rises above the shorted price before covering, potential losses can be huge and are in fact unlimited.

Assuming one is irrational and wealthy enough to tie up $2.50/share in a margin account to short a million shares of a specific sub-penny stock for a potentially tiny gain with a potentially unlimited loss, the other issue would be locating enough stock available to borrow for potentially profitable shorting. It's virtually impossible. Being that are aren't enough shares for even one person to short, how is it possible that many people could borrow enough shares to short?

See also this post: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=91108196

FINRA Rule 4210 - Margin Requirements:

(c) Maintenance Margin
The margin which must be maintained in all accounts of customers, except as set forth in paragraph (e), (f) or (g) and for cash accounts subject to other provisions of this Rule, shall be as follows:
(1) 25 percent of the current market value of all margin securities, as defined in Section 220.2 of Regulation T, except for security futures contracts, "long" in the account.
(2) $2.50 per share or 100 percent of the current market value, whichever amount is greater, of each stock "short" in the account selling at less than $5.00 per share; plus
(3) $5.00 per share or 30 percent of the current market value, whichever amount is greater, of each stock "short" in the account selling at $5.00 per share or above; plus
(4) 5 percent of the principal amount or 30 percent of the current market value, whichever amount is greater, of each bond "short" in the account.
(5) The minimum maintenance margin levels for security futures contracts, "long" and "short", shall be 20 percent of the current market value of such contract. (See paragraph (f)(10) of this Rule for other provisions pertaining to security futures contracts.)
(6) 100 percent of the current market value for each non-margin eligible equity security held "long" in the account.

http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=9383