BB's Stock Haven

[hopscotch]

a lot of these little pink and otcbb companies cannot get financing elsewhere if they need it. So they end up going to hedges like cornell, which imo is the worst of them all. They borrow money and in exchange they offer discounted shares as payment. If they cannot make payments the conversion is adjusted usually and they have to issue additional shares. Most of them cannot. The huge problem is, especially with PIPE's, is the financing company will unload them and short them to boot. As the price falls, the company who got the financing has to offer them even more shares at an adjusted price. It's extremely difficult to get out from under once it's begun. That's where you see the death spirals. I never ever buy PIPE stocks or cornell ones. Sometimes they pop but that's almost alway pure manipulation too.