Well, well, well. Looking at our starting point this morning is exactly where I said we would be and yet no one would believe me yesterday. I laughed at all the funny stories last nite on why the dilution happens daily. Here is why if you care to know:
Company had a $2.5 million CD
Company negotiated it to stay alive
Company's only choice was to make it floorless (death spiral financing).
Company in the last quarter converted Approximately $.9 million into 1.3 billion shares. CD still has $1.6 owing.
Because it is floorless and the usual terms for these things are 70% to 80% of the 3 previous trading days LOWEST traded price for conversion pricing. This one element allows the CD holder to short the company to being almost worthless because if they convert they get more and more shares as the price goes lower OR if the company goes bankrupt they do not need to cover at all at the shorting is all profit.
Now when the company wants money, they contact the CD holder who then get the conversion price and exchanges money for shares.
These shares are Common stock which they then use to cover their shorts but because the get 20 or 30% more because of the discount rate they have a clear double profit.
If these Common shares have a restriction of time then here is the big question: IF THESE SHARES CANNOT BE DUMPED INTO THE MARKET UNTIL 2007, WHERE ARE ALL THESE SHARES COMING FROM??????
My bet is the Company is selling also because if all these individual investors who bought 2.5 billion shares were as excited as many of you here then they would be holding not selling. Something stinks here and until Sandy comes forward, this stock will see .0001 today!!! jmho
