Elite Pharmaceuticals Inc (ELTP)

[The ELTP King]

If this is true then my assessment was wrong about Nasrat converting to common in order to use the remainder of the Lincoln Park funds.

Does anybody actually have a good educated reason as to why he converted to common shares?

Lots of people are saying it's just because he hit his 3 year mark and it's a non-issue and nothing more.

What would be the purpose of converting to common shares at his 3 year mark?

The Series I Convertible Preferred Shares had NO expiration date as shown on the most recent Form 4 filed by Nasrat.

Has anybody contacted Dianne?

Thanks.

Lincoln Park Capital are not longs.


Obviously, these kinds of financing organizations do not generally discuss their business model, but the way they make their money is not hard to figure out. It basically involves churning most of the shares as they get them. If they keep any for long-term, it's probably not very many, and maybe only (some of) the free shares they get to initiate the deal. In this deal, they were given nearly 2,000,000 free shares. If they hold those for multiple dollars on buyout, then they did really good. But even if some company goes bankrupt after placing their maximum number of shares for purchase, then LPC still makes money because they're not holding those shares- they sold them immediately. They purchase the shares at a "discount," meaning most of their deals look like ours:



Quote:
The purchase price per share for each such Regular Purchase will be equal to the lower of:

· the lowest sale price for our common stock on the purchase date of such shares; or
· the arithmetic average of the three lowest closing sale prices for our common stock during the 10 consecutive business days ending on the business day immediately preceding the purchase date of such shares.



So if Elite has them buy a million shares, their price is either the lowest price of the day, or the average of three lowest closing prices in the last 10 days (whichever is lower). As such, there are very few circumstances in which they cannot make a profit by selling those million shares the next day (and since they are sitting on 2 million free shares, most of their sells are as a "long-term" holder). They are not allowed to short the stock or loan the shares, but they can do whatever else they want. They have to keep churning to keep the capital flowing. They are not, for the most part, long-term investors but rather intermediaries between the company and the market. They likely have some formula for holding a certain percentage of shares, but even if they love Elite, it is just not their business model to hold these stocks long-term.


The good news is LPC does NOT likely have more than a few million shares right now, and LPC will not be the ones to put the brakes on any possible upcoming rallies.