Its interesting that some traders focus on 2 things, dilution and management/insider stock issuances. Normally, these two items are at the top of any traders lists as....red flags....right? But knowledge and research are a wonderful thing, and while those 2 aspects of a public company are usually met with knee-jerk reactions when you first hear about them, its better to examine what and how they are for each company. Pointing to "some" aspects of filings" without pointing to "all" aspects of filings, affecting those issues, is like watching the farmer run into the old dried our barn with a set of matches, and yelling fire! without knowing the fact that all he did was light a candle to see.
Good thing Cheeky, Hokie and others have done their complete DD, because the filings also reveal:
That ALL of the notes up to Oct. 15th have been paid off and retired by the company. NO DILUTION up to then and when those notes aged. After Oct. 15th, 3 of those notes have been retired in full, and 1 has been allowed to convert under a strict leak-out agreement, and strict meaning it is controlled and monitored closely by the company and its counsel. The ONLY anomaly was Kodiak, that bought a 3rd party note behind the company's back, violated a leak-out agreement and dumped all those shares over a 2 week period. So what happened next - the company sued all of the bad players for $5,000,000 in Federal Court under Federal Rule 10b-5 Securities Fraud. The CEO even said that any award money will be returned to the market.
Now on to stock issuances to insiders/management. The disclosures demonstrate the stock issuances were done for 2 reasons, to get rid of bad players (former Stratton Oakmont Brokers and their affiliates) who received millions of consulting shares in 2012 when the company was private, and brought the stock down from $1.00 to .005 in less than 6 months after it became public, AND, to make sure the founders and shareholders that put hard money INTO the company, would never lose control. To that end, dilution is bad ONLY when the insiders sell. No FORM 4's, no Form 144 filings, no stock sales in OVER A YEAR. And to AMPLIFY THAT, The insiders recent conversion of preferrers were all voluntarily locked up for a YEAR and done solely to bring the company market cap to the levels to attract conventional equity funding.
The company has been very transparent with its process.
