"Worry about an INVESTOR named Hicks,,, He did it all!
Its all his fault. Nomo, if Tim followed through and bore fruit with even one of his Pr's we would have no worry about Hicks. I dont see Hicks as the enemy at all....
I do see where that could hurt at this point, but enemy?
Seems a shrewd investor to me. I'n reading your recent posts, I think the difference in you and I are your a daytrader.... I'm an oportunist."
Well there you have it. You just explained your position completely. You have no clue what death spiral financing is so you think there was some secret manipulation by tim in bringing this stock from around a buck to around a penny. I see how you could think that way. Let me try to shed a little light on this so that you too may get up to speed:
Conversion financing was made legal so that smaller companies with little or no other sources of income could obtain financing and keep their company going. It seemed like a good idea at a time. When they introduced regulation S, it was in the regulators' minds that these instruments would be more liquid and in turn encourage more financing ability for hurting companies. Regulation S says that the owner of a convertible instrument (debt that at some point can be converted into equity - stock) can sell shares in anticipation of getting his shares converted. What that did was make mafia type financing legal.
Here is the problem with this kind of financing: say a company's stock is a buck. I own $12 million in convertible debt. I am guaranteed 12 million actual dollars as opposed to $12 worth of stock. If I converted the way you would normally think, I would end up with 12 million shares. Instead, I start shorting heavily - say 100k shares a day. after about a week, the $1 pricetag goes down to $.75. After another week, I manage to sell another half a million shares and get the price down to $.50. I do this for a full month and drive the price down to $.10 and have shorted 4 million shares. Now I go to the company and ask for 4 million shares at $.08 (market price minus discount I get for risk).
Now pay close attention: Company now has a pricetag of $.10/share, owes $11.7 million ($12 mil minus $320k).
on the other hand only spent $320k and made $2,400,000 (4 mil shares x .60 average). Smart business? Yup. Usury? That too.
Now a few months later, as the price gets closer to zero, imagine the percentage return I am going to get when I can sell 20 mil shares at 5 cents and cover them with shares at a market value of penny. Think about how little 20 mil shares are going to cost me with my discount after I drive the market price down to a penny.
Can you see how distructive this form of financing is on a business? Can you see how someone could be converting for 6 years and still have 80% of his original investment and made 50 times what the face of the deal suggests? Can you see how 90% of all businesses who have used this financing go out of business?
What the R/S will do is immediately dilute your shares by a multiple of? Maybe 10? and then over the following months - with the success of the company or not, the stock price will drop like a rock again courtesy of hicks. In a year or less, we will have used up all the shares again and tim will need to ask for another R/S.
Now donk, if you as an optimist want to retain value in your investment, what exactly would you be concerned about? a pr that happened months ago or the R/S vote?????? If you are not sure, think before you answer. voting for the R/S is the death knell and it's passage is the one thing that would make me sell my shares but quick. Dont be suckered into a wrong vote just because you don't know enuf about what is going on. BTW, I have not daytraded this stock for over a year and a half. Tim's approach of no PR's has compounded the problem of hicks and kept the daytraders out. Had this stock had a few mil shares of volume a day, it would be harder to drive the price down - we have little volume, hence small dumps will make a much larger impact. Tim's hatred for daytraders has actually hurt his company much more - but that is a seprate issue in itself.
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