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The “quad 4” note was a note that I think was issued to the former owner of the FIMA shell, before the name change to ISBG. It was only for something like $4000 or so, but it had a fixed conversion price of .00001 per share (four zeroes, hence, the “quad 4” note).
I believe it was that note that caused the spectacular collapse from a penny down to .0001 in a matter of a couple months in early 2016, after the whole Cavoda Vodka thing blew up, Pierce got sued by his former VP of sales for not paying him, and Jackie Autry got the hell out of ISBG (oh, and the $50k in stock that they paid to Bow Wow for celebrity promotion became worth about $1500 in a month).
Keep in mind this was pre-split, when the stock was trading at over a penny (or around $4.50 in post-split terms). So converting $1000 of debt off the note would give the holder 100MM shares, at a value of $1MM.
To put that in perspective, in today’s post-split terms, that’s the equivalent of having a note for about $15 of debt with a fixed conversion price of .00000004 per share. So you could convert $5 in debt today and get 125MM shares, which, if you could somehow dump them all at today’s closing price of .0018, would net you about $225,000.
I have a feeling this "name change" is actually going to be a reverse merger into another shell with a much larger A/S, or else will come with a promise to current ISBG shareholders that they will be issued shares in the new company at some ratio, at some point in the "near future." In the subsequent weeks, note holders will have a field day dumping the new stock while ISBG holders are trapped and unable to trade as they wait for the new certs to get issued to their brokers.
Have you considered the possibility that the "panic sells" are from people who bought the stock in the .0020s and .0030s based on Alonzo Pierce's tweets touting an exciting upcoming partnership and acquisition, and then found out that what he was hyping for weeks was actually a $650 online auction purchase of two pre-fabricated websites made a month ago?
ISBG "is excited to announce the acquisition of CBDforSell.com, a strong presence in the affiliate marketing industry with a focus on the hemp, cannabis, and CBD marketplace."
NOTE: This is all just my opinion, developed from a lot of L2 watching and research over the years, so read it, follow the links and verify it for yourself, or don’t, but you’re welcome nonetheless. Also -- **fair warning** -- this may get a bit long and complicated, so if you're bored already here's the TL;DR version:
That being said, it’s a fair question why people wouldn’t be shorting these OTC tickers all the time, given that the few that are not outright scams are invariably failed companies with minimal revenues, incompetent and/or criminal management, huge liabilities and horrific share structures after years of poor performance. I myself have been asking for years on here for someone to please teach me how I can short-sell one of these sub-penny OTC stocks, because betting that ISBG, for example, will continue to decline in price seems like a no-brainer way to make money. But, alas, no one has ever been able to explain to me how I can actually do it, even though I am constantly assured that it is most definitely happening all the time (and, obviously, that the only plausible motivation for anyone spending time on iHub to post negative information about one of these companies is because they are shorting the stock and want to scare me out of my shares in order to cover and not get squeezed). So, again, why isn’t that a reasonable explanation for all the “bashing”?
Well, here’s a few thoughts…
The first problem with shorting an OTC security is called Regulation “T,” which makes no OTC security “marginable.” (See12 C.F.R. section 220.11.)
The ability to buy or sell an OTC stock on margin is further restricted by FINRA, which created even more requirements for shorting OTC Securities with FINRA Rule 4210 .
But wait, there’s more…
The ability to short OTC stocks is even further restricted by the individual brokers, the overwhelming majority of which do not allow shorting of any OTC security, period. (Try calling your Schwab advisor to ask about shorting ISBG, and please record and share the response for us all to laugh at.) This leaves just a handful of brokers that even allow a customer/client to short-sell a penny stock (e.g., Interactive Brokers), but even those have additional requirements that you have to meet in order to actually short the stock – like “Supplemental Margin” requirements, for example – which make it nearly impossible to do so. Not to mention that, in addition to margin requirements, there is a substantial lack of shares available for shorting any sub-penny OTC stock. Practically speaking, there is rarely anything more than 1% of the outstanding shares available at any given time on any OTC security, which is just one more cause of the insignificant short levels observed here in the OTC.
But just for fun, let’s put all that aside and assume that you’ve found a needle-in-the-haystack broker that will let you short-sell an OTC stock. Sadly, you still have a margin requirement problem to deal with, which will be a *big* problem if you want to short ISBG. The margin requirement for short sales from any broker is generally around $2.50 PER SHARE SHORTED, for any stock, including your favorite sub-penny OTC scam ticker. Actually it looks like Interactive Brokers is now up to $5.00 per share, as seen here, but to be optimistic let’s just assume the $2.50 still applies.
To repeat: Any broker that will let you short-sell an OTC stock is going to require that you have at least $2.50 in liquid capital in your margin account for each share you want to sell short. That’s not a particularly onerous requirement when you’re trading stocks at a PPS of $5-$500, but it’s a big problem if the stock you’re trying to short is trading at .0025 per share.
To spell it out as clearly as I can – and read carefully now if you still believe people are shorting stocks like ISBG – in order to short-sell 1,000,000 shares of ISBG at .0025, at a value of $2500, you would be required by any broker I’ve ever heard of to maintain a margin deposit in your account of at least TWO-AND-A-HALF MILLION DOLLARS. With that in mind, do you really think that someone who is smart/successful/lucky enough to have $2.5 million in liquid capital just laying around is going to think it’s a smart or profitable move to tie up all of it, indefinitely, in order to short-sell $2500 worth of ISBG at .0025?
Let’s say they do, and then they come on here and bash all day, and after months of effort – posting day in, day out – they finally manage to drive the price of the stock down (surely helped by ongoing dilution), and cover their short position at the lowest possible price of .0001. To buy those million shares back at that price would cost $100, leaving them with a profit of $2400. Again, I ask you, do you really think that someone with $2.5MM in liquid capital would find it a worthwhile venture to lock up all of it for weeks if not months (with the ever-present risk that the stock might run 500% in a day to boot, as can happen here in the OTC) to short-trade a penny stock that might, in the very best case scenario, net them a gain of a couple thousand dollars? I mean, they would make more on that amount of capital in interest if they just bought a low-risk mutual fund providing 4% interest per year (i.e., $2.5MM invested at a 4% return would yield about $8300 in a month, or over 300% more than your best-case gain by shorting a million shares of ISBG at .0025 and covering at .0001, as you spent hours a day bashing the stock online to boot). Of course, if you up the ante to 5MM or 10MM shares shorted, in hopes of a larger gain, the numbers become even more ridiculous and implausible.
And also, often ignored is the extreme risk inherent to taking such a short position here in the OTC, where on any given day, any given stock can be pumped or manipulated by insiders, a trading group, financiers and/or promoters in general. Because thinly-traded penny stocks like ISBG are easily manipulated and can run 300% in a day without warning, it seems a bit too risky for someone to take a large short position and risk all that liquid capital for nominal gains. Put simply, it stands to reason that no one with the kind of capital required to short a stock like ISBG would be dumb enough to bother making the trade in the first place, much less to spend their time on iHub (or pay others to do so for them) to “bash” the stock in the hopes of maxing out a $2400 profit while risking much, much more than that. There are WAY better places to put that kind of money than into a short sale of a couple million OTC shares.
Thus, Occum's razor seems very useful here – i.e., there is no need for complicated and implausible conspiracy theories that fall apart when you actually think about them -- even a little bit -- in order to explain what is happening with the OTC stock that you just put all your money into because everybody on Twitter said it was going to run when the “BIG NEWS!” comes any day. Rather, the simplest explanation tends to be the correct one, all things considered, and the simplest explanation here is not that unknown entities are taking on extreme risk and opportunity cost to short millions of ISBG shares, but rather that you’re being conned by note holders who can, for all practical purposes, print an unlimited supply of money and make large profits as long as there is still a bid at any price.
Yes, I know, the SEC should be doing something about all this, but IMO it simply does not have the funds or the manpower, or perhaps the motivation, to do so. Instead it resigns itself to putting out the occasional news bulletin or warning notice, or setting up a website like this one.
But I digress…
Okay, back to the defrocked “Sell-Shorts” and the so-called “short volume” that promoters are always yapping about…
Specifically, you often see pumpers, stock promo newsletters, and sometimes even unscrupulous and/or ignorant OTC companies themselves blame the endless and rapid decline of their stock’s price on “naked short sellers.” An example:
The real culprits, of course, are the holders of convertible notes that your “emerging market leader” of a company entered into 6 or 12 months ago (the length of the required Rule 144 holding period depending on whether the company is SEC-reporting and current or not) in exchange for cash that gets spent on massive and non-itemized “general and administrative” expenses without ever seeming to grow the company’s revenues or otherwise help to establish it as a viable business. But I digress again…
The large convertible debt notes held in exchange for cash loans to these OTC companies permit the holders to obtain newly-issued shares directly from the company’s transfer agent – with no ability for the company itself to stop the transaction – usually at a conversion price of around 50% of the stock’s lowest trade price in the preceding 10-20 days. The debt holders can then sell those shares into the bid for an easy 100% profit on their original investment, and if the price drops from all that selling (which it will), they can just convert the same dollar amount of debt at a lower PPS for even more shares. Hence the reason why a mere $10k note can lead to tens of millions of new shares hitting the market (or hundreds of millions, if the stock is trading in the low trips), and why the outstanding share counts of these companies tend to increase exponentially the lower the PPS goes.
Perhaps an illustration will help explain this a little better…
Let’s say a stock recently traded as low as .0004 per share. As noted above, when debt holders convert their debt notes into shares, they typically get those shares at around 50% of the lowest bid or trade price over the preceding 10-20 trading sessions (depending on the contractual terms of the particular note). In that case, a debt holder owed, say, $10k, can get 50MM shares for that debt if they were to convert it in full at one time ($10k / .0002 = 50MM). And, even selling into the bid at .0004, they are still making 100% on their original loan amount (i.e., if they can sell those 50MM shares they got for their $10k loan at .0004, they will walk away with $20k for a $10k profit).
This is why convertible note holders don't care about the PPS, because no matter what it is, they are always converting around 50% of the recent lows and making their money back, at worst, and 100%+ in profit otherwise. If the PPS drops, they don’t lose money, they just get more shares for their conversions to compensate for the lower PPS. Debt holders want liquidity, and a bid – any bid – to dump their converted shares into, and that's what all the company-coordinated tweets and PRs help to create (hence, “sell the news”). Every time that happens, of course, there are that many more shares in the market that retail buyers and flippers are looking to sell into any increase in price, nipping any run in the bud and all but ensuring that the stock will continue its inevitable march downward. Incidentally, this is why note holders don’t convert their debt all at once but do it in tranches, selling $5k or $10k worth at a time so as to account for the declining PPS and repeat the process with ever more shares at a lower and lower PPS, until eventually the stock is at no bid with 800MM shares sitting on the ask at 0001.
A familiar refrain of promoters is to aggressively ask why, even if all this is accurate, a note holder would just dump all those shares into the bid instead of holding them to let the stock run and sell at a higher PPS. The answer, IMO, is that, when there are already hundreds of millions (or billions) of shares out in the market for a stock trading in the .0001-.0030 range, there is a lot of competition to sell shares at almost every tick. This is particularly true where there are multiple note holders selling at once (such as when you see MAXM, VNDM and ARCA all on the ask at the same time). To be sure, sometimes a coordinated group or Twitter campaign can come in with significant capital and lock up a big enough portion of what’s liquid out there to get a decent increase in price, but all in all I think the note holders’ (very rational) view is that it is better to take a guaranteed 100-300% profit than to hang around with the retail traders hoping that the PPS goes “to da moon.” A bird in hand, as the saying goes.
Now about those t-trades…
Let's say I'm a company insider or “affiliate” or note holder with a bunch of discounted shares that I got at a 50% markdown from the recent lows, and I want to dump them all into the market to make my profits ASAP. I call up my guy at VFIN, VNDM, ARCA, CDEL, etc., and tell him I've got a block of 10MM shares I want to sell at the best price he can get without totally crashing the PPS (so I can sell my next 10MM block tomorrow at similar prices, obviously). He says, “cool.”
Because I'm a big-time seller, I don't pay the per-transaction fees that retail traders pay to have Schwab or E*Trade execute their orders. Instead, my preferred diluting MM and I agree on a standard fee of, say, 1.5% of the volume weighted average price ("VWAP") for all of the trades that it takes him to sell my 10MM shares of an essentially worthless four-letter ticker symbol trading on the OTC. My MM then goes out and executes those trades throughout the day (or several days, depending how large my block is), selling in bursts of a few hundred thousand to a few million shares (depending on the bid size and trading activity, etc.). Meanwhile, my paid promoters on Twitter and the stock boards explain this activity to their marks as simply “weak hands folding” or “scared retail,” and assure me that if I just hold a little bit longer (and thus don’t contribute to the selling pressure pushing down the bid at an alarming rate), I will soon be able to retire with my ticket to Pennyland. “Know what you own,” “ignore the bashers trying to scare you,” and all that jazz.
Returning to our hypothetical example, let's say it takes my MM guy 15 separate trades to sell all of my 10MM share block. Let’s say he executes some of them on the ask at, say, .0013, and the rest at .0010-12 by dumping big blocks into large bids whenever they pop up. The way it works is that all of those trades are sold as short positions (and show up as the "short volume" reported on various sites). That is “leg one” of the transaction. Then, once all 10MM are sold, my MM "covers" those open-but-temporary short positions by "buying" those 10MM shares from me (i.e., from the block position that I put up for sale), either during the trading session or as a t-trade after close. That big block trade is then reported to the tape, but at the VWAP minus his block position fee.
Hence, you see a 10MM share trade register "below the bid" at .0012, i.e., at .001183 or whatever it comes out to be based on the average of where all my separate blocks were sold. This is "leg 2" or the "riskless principal" leg of the transaction, which is what explains all those 6-decimal trades that we have been able to see in real-time since L2 started reporting more than 4 digits a couple years ago. It's also why the "short volume" for a stock can be in the tens or hundreds of millions of shares on a given day when the actual short interest (i.e., actual short positions taken on a ticker that day) is zero.
In sum, that 10MM share “buy” that you saw at 3 :18pm or whenever was not actually a 10MM share buy; it was instead the closing out of a series of riskless principal trades that had already taken place as my MM dumped my 10MM share block in pieces into the retail market.
Still with me? Ok then, for the few who remain, let’s get back to “short volume” vs. “short interest”…
The main source that the unscrupulous folks cite in support of their allegations of “naked shorting” is the OTC Short Report data, which I believe is published by FINRA on a daily basis. This data, however, is not reflective of actual short positions taken on a stock, and, accordingly, is not indicative of any actual short interest, particularly with OTC stocks. Instead, as noted above, the “short volume” data merely reflects the second “leg” of a long transaction that has occurred as a normal part of market-making activity. Thus, to claim that short volume is “proof” that a stock is being shorted—let alone that the evil MM’s are naked shorting that stock you bought for three thousandths of a penny per share—is entirely false and misleading information.
I repeat:
“Short volume” is not the same as “short interest” or “shorting.” The latter two describe a position that is taken in a stock, whereas the former usually represents (in the OTC at least) the first half of an order execution that is recorded as “short volume” even when the underlying trade is actually a long position. This is why daily “short volume” reports are almost entirely useless and do not actually reflect short selling on a ticker. Quite to the contrary, because of the way that large block sales are often executed and reported to the tape, an increase in short volume on an OTC ticker is more likely an indicator of increased share dumping by company insiders and/or toxic financiers, which obviously will depress the PPS.
It should also be obvious why such entities (like ISBG’s tweet today) love to use the “short volume” indicator to perpetuate the myth that such PPS drops are the result of “shorts” and “bashers” rather than admit to the simpler explanation, which (as with ISBG) is often clearly exposed in the company’s own filings (see here).
While the company and certain posters might rail against naked shorts and/or proclaim that there is no dilution going on, the real story is that massive dilution and dumping is almost constantly happening, to the detriment of the naive and gullible retail “investor.” Remember, these “companies” are strapped for cash and hopelessly in debt, and the only thing of “value” they possess is the ability to print out a sheet of paper that they call a “share certificate,” which the holder can then sell to some anonymous member of the public on the OTC market based upon obviously false and easily disproven promises of future gains. When the inevitable losses occur, these people are told by the same individuals who sold them those pieces of paper for cash to blame various “boogeymen” for their losses, rather than the people who are still advising them to “average down” and “keep buying!” despite the collapsing PPS because “anything under .01 is a gift!” They must not, they are told, let the “shorts” and evil MM’s “win,” and they must instead find ever more cash to “slap the ask!” in order to “squeeze the shorts” and force them to cover their “massive naked short positions,” which will then take the stock to the moon, obviously.
At this point, perhaps a little history is in order.
Before 2008, my understanding is that there was no real disclosure to as how particular trades were initially executed. In fact, there was no reliable data as to the number of naked short sales within the OTC market, and abusive naked short selling was at that time a real concern. This is, accordingly, when the OTC “naked shorting” myths took root, but to the extent that any of those suspicions may have been valid at that time, everything changed with the financial reforms that occurred in the wake of the 2008 economic crash.
Pre-2008, it appears to me that naked shorting concerns were very valid, despite the fact that the SEC did not see abusive naked short sales as a massive problem (and in fact was quoted saying something like “they are not an issue within our markets.”) As it turns out, that was inaccurate, and there were an alarming number of shares sold without delivery – and in some cases there were securities severely impacted by large numbers of abusive naked short sales – before 2008.
As they like to do, however, the regulatory authorities imposed new rules to address the problem in light of these concerns, and the result was a new way of reporting trade executions to provide transparency for the entire transaction. In particular, two points in time are now paid attention to: (1) the initial execution of a trade; and (2) the final settlement of the trade.
Now let’s turn to the OTC post-2008. As an initial matter, note that the OTC is a market, and not an exchange as many try to claim. In other words, the OTC is a quotation service that requires MMs to quote securities to provide a centralized place for bids and offers. Without MMs, you have a so-called “grey” market where there is virtually no order flow or liquidity. So for all the talk about the “evil” MM’s, they are an essential part of the OTC and it could not function without them. Indeed, each broker has a market maker contracted to work for them to aid in execution of trades here in the OTC.
As long a security has a Form 15 filed – or is an exempted, unsolicited-quote security – MMs can quote offers for their customers. Quoting customer orders is essentially all that MMs do here. Contrary to popular belief, they do not buy/sell OTC securities for their own profit, as they make plenty from commissions on customer orders with none of the risk. That is why what is often attributed to MM “manipulation” to “get cheap shares” down here is actually just MM’s selling huge blocks of shares for their customers, i.e., the company and its officers/associates, toxic financers, and/or frontloaded or paid promoters who are looking to dump a lot of shares onto the unwitting public and try to blame the MM’s for this rather than the customers on whose behalf the MM’s are buying/selling.
In addition, note that the OTC market and all its daily transactions are entirely electronic -- from the initial trade execution to its settlement -- and require no human intervention or input to operate. Really, there are only two reasons why an actual human being would get involved with an actual trade execution: (1) you phone in a specialized order; or (2) a trading error occurs that requires manual reconciliation. Unlike the popular image of brokers barking orders at each other on a real-live trading floor, these days the clearing and settlement process requires no human intervention as long as a security is in the Continuous Net Settlement system (“CNS”) (see here for more info: http://www.dtcc.com/clearing-services/equities-clearing-services/cns.aspx). This is also why DTC eligibility is so important, as it allows a ticker’s booking/accounting/clearance/settlement to be completely hands-free.
Now back to the regulators and the short reports. The SEC has rules in the 200-series that cover short sales, in particular Rules 200, 201, 202T and 203. The main two here for our purposes are Rules 200 and 203, with Rule 200 defining both short sales and ownership. You can find everything concerning SEC Rules 200-203, including the following quotations, here: http://www.sec.gov/rules/final/34-50103.htm
In all of this, it is essential to understand that, in the case of MMs working the OTC, virtually none of them own the shares when making a market here. Their job is to “make a market,” not trade in it, and accordingly their goal is to end each day holding nothing but a nice pile of transaction fees, not risky shares of OTC stocks.
That said, with the new rules that were implemented post-2008, the SEC applied the marking requirements for big-board securities to OTC securities for the first time:
This was a significant change from the old system:
In other words, under the old rules, a market maker (i.e., a “broker-dealer”) could sell an OTC security owned by its customer and mark it as a “long” transaction so long as its customer’s account had actual physical possession of the underlying security (i.e., the physical stock certificate). The MM could thus act as a sort of “middle-man” to make the “long” sale (i.e., the sale of a security actually owned by its customer), and take its fee without actually ever handling or possessing the physical security itself.
Under the new rules, however, the MM is required to have physical possession of the security in order to mark a sale as “long.” Now, even if the MM is selling shares owned by its customer (i.e. even if it is not a “short sale” of borrowed shares but a “long sale” of a customer’s actual shares), it must mark the sale as “short” if it is not going to take physical possession of the stock certificates within the 3-day settlement period. Thus, marking an OTC trade “short” is simply a way of defining physical ownership of the security.
Getting to the meat of it, here are some examples of trades that require being marked short. Let’s use a generic trading symbol, XXXX:
In a typical, everyday trade, let’s say I have 20,000 shares of XXXX for sale on the ask, and that you want to purchase 10,000 of the shares at my price. You enter your order, and it is sent to your broker to execute. The first thing that happens is that your broker electronically checks to see if there are current sell orders that match your request, and, if not, it is off to the ECN. As noted earlier, each broker has an MM working for them to execute trades, and the MM for your broker will see your order and know I have 20,000 shares for trade. Here is where MMs “create” liquidity and order flow. The ECN matches perfect blocks trade for trade, where size and price are matched and trades are automatically initiated. In this example, you only want 10,000 shares, so immediately the MM sells your broker 10,000 shares short and marks the trade as “short,” even though you are long in the trade, and this gets reported to the Daily Reg SHO report, and also on the consolidated tape, as “short volume.”
Now, nearly simultaneously, and on a separate leg of the very same trade transaction, the MM is covering its 10,000-share short sale by buying 10,000 shares from my 20,000 share block (i.e., the MM purchases 10,000 shares from me to cover the 10,000-share short position it just opened moments ago). Again, this gets reported in the Non-Tape Transactions Report, which is later sent to FINRA along with the consolidated tape report for balancing and reconciliation.
Accordingly, the Daily Reg SHO report (which provides the OTC Short Report data) only reports how my trade was initially executed, and it does not reconcile or otherwise account for the fact that the “short sale” was covered almost immediately, as that will be taken care of in another report. Regulators only want to know exactly how the trade was initially executed and that is it, so the trade simply goes off to the DTC and NSCC for clearing and settlement. According to SEC reports, 98% of all trades are cleared and settled within the same day of trade (or T+0). Still, regulators now allow T+2 for settlement, which is the trade day plus 2 days for settlement. Only if it takes longer than that to settle the trade does it become a FTD (Failure to Deliver).
The FTD report marks the end of the entire trade transaction, and a trade is only marked FTD if it goes T+3 before settling (ISBG currently has none). Now many will tell you that if a trade is on the FTD report, that means it was either shorted or abusively naked shorted, but both are in fact wrong as the SEC has clarified:
In other words, there are multiple reasons that an FTD might occur, including error trades and so forth. But even when a genuine FTD occurs and sets off red flags, that situation is covered by SEC Rule 203:
The upshot of all this is that convertible debts, for example, can create “marked short sales” and FTDs if they are not delivered right away. This is the cause for huge “short volume” numbers in the Daily Reg SHO report, and also, sometimes, for FTDs. You commonly see these massive T-Trades at the end of the day in some securities, which are usually a reliable sign of dilution, but the point is that trades executed throughout the day from the debt conversion will all be marked “short” in accordance with SEC Rule 203.
So this is what the oft-cited OTC “short sales” actually are, at least as far as I understand them. They are not actual short positions, and they are not “abusive naked short sales,” but rather they are simply trades marked short for temporary moment in time. Unfortunately, the information that’s reported from these transactions (read: OTC Short Report) is often touted and manipulated to make stupid conclusions that there is “massive shorting” against a security. Indeed, whole websites have sprung up that provide this information as if it is some type of trading knowledge to be used in making trade decisions. Unfortunately, it is all fodder and is of no use to anyone other than the regulators who track trade settlements from initial execution to final settlement. And what kind of nerd would do that, I mean really???
You know, the "naked short" theory would be a bit more plausible if the number of outstanding ISBG shares had not gone up 800% in the past 9 months. The whole point of the "naked" part of "naked shorting" is that the MMs are supposedly selling "air shares" that don't exist and were never issued.
Naked shorting can't explain why the O/S went from 54MM to 500MM within a year. But debt conversion can...
Some people just don’t like seeing fraud perpetrated on the investing public and realize the SEC is never going to do anything about it in this OTC swamp, so they make it a hobby to help share truthful, factual information about these companies that the companies themselves will never tell you or try to cover up.
The naked short myth can be a convenient excuse to have to change the name/symbol and reissue new shares while note holders dump during the transition phase and ISBG holders wait days/weeks to get their new shares.
In which Alonzo Pierce demonstrates yet again that he does not understand the difference between short volume and short interest or how OTC market making works.
Nobody is in significant profit at this level so close to 52W lows, so without an A/S raise if there’s continued significant selling it seems safe to assume it’s insiders dumping some of the 500MM shares already out there
10MM cross trade on 6/4 10MM cross trade on 6/6 24,386,417 cross trade today
Equals
498,200,172 shares outstanding
Leaving
1,799,828 left to dilute before A/S is completely maxed (unless I missed a cross trade).
IMO either the A/S is getting raised, or Pierce is going to sell off ISBG’s assets to some other shell and then promise ISBG shareholders they will be compensated in shares of the new company very soon (just like last time! and DKTS shareholders are still waiting on ISBG to pay for the acquisition of Besado and Dziaq...)
Notice that none of the “acquisition” tweets have specified whether ISBG is acquiring something from some other company or some other company is acquiring something from ISBG...
Really starting to smell like a classic Pierce exit scam. Put a big flashing "NEWS!" sign out in front of the shop to distract people while you sneak all the goods out the back door. By the time lenders and their lawsuits catch on all that's left is an empty shell and a whole bunch of bagholders.
How does a one-man company with $9000 in cash, $2100 in revenue, $500k in operating expenses, $3MM in liabilities, a maxed out A/S and a long history of failure acquire anything of value?
Wait I thought he just tweeted that they had a signed “acquisition contract”, now it’s a “merger” being “negotiated”? Does Pierce know what those words mean or is he just saying stuff that sounds business-y?
That appears to be correct, although you left out the various company tweets interspersed in there teasing the big "partnership" for a few days at market open and over the lunch hour:
May 23: "$ISBG Partnership talks now enter into Phase 1. The partner we are seeking has now partner with the following cannabis brands Guild Extracts, Papa & Barkley, Whoopi & Maya, Elyon Cannabis Farm, Cookies, and Lagunitas"
(By "Phase 1" I guess they are referring to the initial "dood we should start a website!" call?)
June 4 (10 minutes after market open): "$ISBG Partnership updates to be release this week."
June 4 (a little after noon): "$ISBG Consider the partnership a done deal. Official Press Release will be release regarding our new partnership."
June 5 (10 minutes before market open): "$ISBG Finishing up the partnership Press Release, shareholders expect an update this week regarding our partnership."
June 5 (a little after noon): "$ISBG-- Our new partner is currently affiliated with Amazon. The partnership will give us access to a $10B space. Official Press Release with details will be release this week."
And then the PR you linked...
For a $300 website with no traffic, a bunch of stock photos/links, and a strange name.
"First, we will be a feature brand for all those who flow through the Cannabisfuse.net site for products, services, and news related to cannabis, hemp, and CBD."
You mean the pre-made "starter website" that was bought in an online auction a week ago for $299, the sales listing for which even says that neither the content, the design nor the template for the website is unique? That cannabisfuse.net?
"A Starter Site is a brand new website. As it has recently been launched, it's unlikely to have traffic, revenue, or page rank."
"This is a duplicate website. The content and design are in use on at least one other website."
The RWB “acquisition” was the reason the company gave for the reverse split:
Then what happened was, ISBG put out a couple PRs announcing that they had acquired RWB vodka and then tweeted pics of bottles in stores and twin peaks girls next to a RWB racecar and listed it as one of their brands in filings and said the relaunch was coming and the board said oh man this is gonna be huge!
...and then we didn’t hear a thing about it for months and months and then some other OTC company announced how they were relaunching their RWB vodka brand and that they definitely owned it and ISBG didn’t say a thing but just quietly removed it from their list of brands in the next financials.
And there were the $400k-per-quarter export “agreements already agreed to” and the $425k+ sale that was announced as completed that I recently posted about (I think it’s in the sticky post above)
And then there’s the usual “acquisition” BS they put out when they have to increase the A/S:
Spoiler alert: the float exploded in the following months as the A/S was maxed out and raised some more, and there was no acquisition.
And again here:
Same result.
And this hilarity:
And on and on and on. The only constant being that the A/S *always* gets maxed out from debt conversions, and then raised ”for acquisitions” that never happen.
The company always uses the acquisition cover story when it needs to raise the A/S for debt conversions. The conversions always happen. The acquisitions never do.
Don’t tell anyone but I heard ISBG is acquiring Delta Airlines and the Delta Club at SunTrust stadium will soon be replaced with the “Besdao Gummy Lounge” and Chipper Jones is about to sign on as the new spokesman. The 8-k with all the details will be filed this week. Boom!