Hop-On Inc (HPNN)

[billytbone]

There will be no buyback here. It would be totally illegal. For a buyback to be legal what they need to have is net assets after accounting for the Company's liabilities and any amounts due to preferred shareholders. The reason is that a stock buyback is considered to be a distribution to common shareholders, and by law, they are only allowed to distribute assets to common shareholders that are actually owned by common shareholders. And common shareholders only own the assets that are left after all debtors and creditors are paid in full and the preferred shareholders are satisfied to all amounts due to them (in many cases, that would not only be unpaid dividends, but also any liquidation preferences, which can often be very large - up to multiple dollars per share).

And, by law, the Company is required to prove they satisfy the legal requirements by publishing current financial statements that are prepared under US GAAP (for US companies). For many of the non-SEC registrants that pay OTCMarkets to publish their non-compliant financial statements, that is significant issue.

There has been a significant uptick in penny stocks announcing "share buybacks", and I have yet to see one that is actually permitted to do by law. They seem to have another common denominator - they all have significant amounts of toxic death spiral convertibles outstanding with the usual suspects. And those usual suspects all have in their toxic convertible agreements that the issuer is not permitted to repurchase stock while the toxic convertibles remain outstanding. I do not believe it is a coincidence - I believe the "share buybacks" are being orchestrated by the toxic lenders as a way to drive volume in the stock they can convert and dump into. Because these companies certainly can't borrow money at a significant discount, issue shares at 40-60% below market price, and then repurchase the same shares almost immediately at full market price (and turn around and reissue them to the toxic lenders at a 40-60% discount again). But if these non-profitable (and often non-operational) companies are to be believed, that is exactly what is happening.