Alright time to do a little TSTS/OTC school here. Topic will be dilution. Important topic because it rules the OTC. Market makers, proper term dealers, use algorithms and dilution is a key factor in these algorithms.
First, someone who whines about dilution and yet plays OTC stocks is absolutely clueless. Practically none of these OTC companies make a profit. These are micro cap companies and start up companies, some are straight up scams. Know your market place that you are playing in. If they don't make a profit then they need capital to continue right? Well that is why the vast majority of these OTC companies have dilution.
Matter of fact if you hate dilution then actually don't invest in any stock period. All, I repeat all companies have diluted. Why does a company go public? To have the power TO SELL SHARES. What happens when a company goes public? It is called an IPO (initial public offering) and what are they doing? SELLING SHARES. What about a secondary offering? Yep selling shares. BAC has billions of shares outstanding for instance. You think back in 2007 they had as many shares out as they do now? No they didn't. The financial crisis put them in grave danger. Dilution helped Bank of America to get a better financial footing at the time. Citi was the same. Citi diluted enough that they had to reverse split by 2010 I think it was. I understand and I am not comparing big financial banks to OTC companies but my point is that ALL companies sell shares and dilute at some point. If even blue chips do it then you know OTC companies will do it. If you hate dilution then do not invest in stocks period.
Alright moving on, time to clear up how an OTC dilutes. First off TSTS is a QB on the OTC. To be QB they have to report and file with the SEC. (Pink sheets are different, they do not have to report although some do anyway) What that means is that if there is going to be insider or company selling of shares then IT MUST BE FILED. It's called a form 4. If there is no form 4 filed then no insider is selling.
Next, the way a Nasdaq or NYSE company sells shares is that originally they do an IPO, after that if they want to sell then they can do a secondary offering. A ton of paper work has to be filed and it is expensive. They can also sell warrants and they can sell convertible notes.
OTC is different. First many are not going to spend the money it takes to do secondary offerings. Second even if they wished to the SEC does not allow it currently. OTCs can sell warrants and convertible notes. Most OTCs sell convertible notes to raise capital. Typically I'd say on average the term of the note is for 6 months and sometimes can be converted at any time. Usually with a look back period of 14 days and 40% discount. Notes vary though and the terms are what the lender and company agree to. The SEC MIGHT/MAYBE allow for OTC companies to do straight stock offerings in the future. Toxic lenders have been too greedy and have been doing naughty things in the eyes of many. The SEC may in the future allow OTC companies to do offerings straight to the market to limit the toxic lending practices that are occurring in the OTC. My guess though is the SEC isn't going to change anything and the toxic lending will continue.
When a QB like TSTS sells a note there should be a filing. Once a note gets converted to shares there will be a filing called a 13g. The 13g usually isn't filed the very day of the note conversion. Usually maybe the public sees it about a week later.
When you see dumping on a QB OTC stock it is the toxic lenders the vast majority of the time doing the dumping, NOT company officers. Again filings have to be made and those filings tell you who is dumping.
Further more you can tell dumping is happening by which dealer is playing ax. The following are the prime dealers toxic lenders use: VFIN, BKRT, VNDM, BMAK, and CDEL (yes CDEL if 10,000 on ask usually). The following are the primary retail dealers: NITE, CSTI, ETRF, ATDF, CDEL (Citadel securities is the big boy on the OTC. CDEL is everywhere and can be a dilutor at times but usually he is a primary retail MM.) NITE used to be the big boy on OTC but they did something stupid years ago and almost went bankrupt. If you see BKRT, BMAK, VFIN, VNDM (and sometimes CDEL, again depends) as ax with an iceberg then the toxic lender is likely dumping (an iceberg is large amount of shares that are to be dumped but the dealer hides it and just shows a 10,000 number. Sometimes they change that number up. BKRT sometimes uses 1 million or 500k for instance). There are less used toxic lender dealers like DINO for instance. If you see the retail dealers as ax primarily then retail is dumping (you and I are retail).
Sometimes the dilution dealers have nothing and are dorking around doing something else (they do short, and shorting is absolutely done by dealers. For retail it is very very difficult to find a broker that will allow you to short OTC, maybe an offshore broker will allow. I think Interactive Brokers will let you short some OTCs if over a penny, not sure though) Sometimes they are just there to discourage buying. If a toxic lender dilution dealer moves very easy and it only takes a couple of ask slaps to move them then they probably don't really have an iceberg.
I know this is really long but some really need to read up and learn some things. I think it is good beginner OTC information. This information I consider just the basics.
