PLEASE STICKY - MY FINAL VTNL POST, HERES WHY:
Dear board, its been a heck of a ride with you guys, but I’m out. I do not want people speculating as to why, and want to be real with you guys since I don’t believe in making a buck based on dishonesty and misinformation. I am not presenting the following information in anyway to manipulate the share price, and as of this point, am not holding and shares. Please read carefully and make your decisions….
After carefully digging through the Press Releases and 10-Q filing, here is what I have come to learn... Firstly, the company does NOT have significant cash at hand to purchase 80% of the float. 80% of the 1,200,000 O/S is equivalent to worst case 960 million shares trading in the float. If they bought back at 0.002, they would need $1.9 Million dollars to purchase this amount. Where is this money coming from? I know revenue is revving up but based on accounts receivable practices, it takes 45 – 90 days to get the $3.7 million to cash at hand, and doubt a company would put all that effort into buying back float rather than improving operations. They will need a majority of this money to continue building product, and all the costs associated with it. This lead me to think… why would they state 80% float buy back?
The most important part of the February 28th press release was this comment… “As we exceed our projections, we have instituted a share buy-back program for March-2018 as a part of retiring 80% of our float.” Please note carefully the wording that they say, “as a part of retiring…” I’ve now taken this to mean that they aspire to eventually retire 80% of the float, but nowhere do they state they will purchase 80% of the float in March. They clearly say, “As a part”. This is very sneaky if you ask me. Legally, they are protected by the wording. Read over it carefully before moving on to my next point…
The second most important thing to note is that on the February 26th Press Release, the CEO says, “I recently announced our purchase orders for January and February 2018 of $529,790 and $245,000 with a major retailer which will allow our Company to start the process to purchase-back shares of the company in order to focus on anti-dilution measures”. The key word in this statement is the “anti-dilution measures”. Clearly the CEO thinks there will be dilution, and the share buyback is only a measure to counter this. So YES, there is dilution going on, but from where? If the company is buying back, who is diluting?
3rd most important point… This lead me to dig into more carefully the filings. When looking up “notes” I found that they had an outstanding $490,000 worth of convertible notes for 9 months ending in September 2017. This is not including the most recent $100,000 that was recently announced on March 13th,2018.
The notes are clearly broken down, and show most will mature in the next 2 months, with the first one going to mature on March 16th, 2018 for a total of $64,000 where the lender gets to convert shares for 42% to the lowest of the past 30 trading days. The lowest the shares traded in the past 30 days was at 0.0005, and at a 42% discount, they get $64,000 worth of shares at 0.0003. This means just on this note alone, they will get about 213 million shares readily available to dilute into the float. That is way too many shares for the company to absorb…. Now if you tally up all the notes in the next 2 months, there will be dilution in the order of BILLIONS. This is nuts, and now I’m really kicking myself for not having sold all my shares for a profit, and holding some and buying more at 0.0021.
This clearly explains why the company raised A/S from 15 billion to 25 billion. With all the notes to be converted in the next 2 months, they legally had to, so that O/S doesn’t exceed A/S.
Here’s the silver-lining and conclusion to my discovery…. The company is increasing revenue and will one day be profitable, but for early investors this spells only disaster. There will likely even be a 1:100 or 1:1000 reverse split if the company is serious about NYSE one day. From a day trading standpoint, diluters will typically attempt to raise the price before they dilute the stock, so there could be a nice bump like we saw earlier this month, but guarantee it will come crashing down. There was a convertible note that matured on February 28th, coincidentally aligned with when we saw the major run. This run was intentional for noteholder to sell as many shares as high as possible (See below in convertible notes section). More I think of it, the more I realize that this was all a pump and dump so that noteholders could sell as much as possible at the highest price. This is very typical in the OTC. Not only that, but based on the amount of shares to be converted, that this is infact toxic dilution. This would explain market maker BMIC (a common diluter) constantly on the ask, even during the pump phase taking on millions of shares. Again, there is another notes convertible due on March 16th, and more than likely there will be a nice run and great exit strategy, but the stock will soon come crashing down as 200 million new shares hit the market. I guarantee BMIC will be out in full force again.
4th most important point, fins are due March 30th, but will not report revenue between January through March, the fins will be for all of 2017, so the revenue numbers won’t show as it took place in 2018. Since most traders are very uneducated, they will think “geez, wheres all the revenue they said they had this month” and will cause panic selling…. All because they don’t understand that the revenues from Jan – March will be in the following fins, due May 15th. And trust me, you have to be smarter and a step ahead, so again, I’m out for this reason. VTNL will be on my watch list, but next time I come around, it will be to catch the momentum, in and out in a matter of minutes or hours, but will not hold this stock again over night.
5th most important point, look at the chart with volume. You will see volume has picked up these last 2 months. This is the MOST tell-tale sign of dilution. There was a note that converted in December that kicked this toxic dilution spiral. If you don’t believe me check the charts and notice how volume ramped up.
For the sake of people not heading my warning, I hope that I am terribly wrong. But after years of experience, I am almost certain I am not. All it takes is to verify the DD I’m providing you on your own. I’m not doing this to bring the price down or upset anybody, but to honestly protect people who are not aware of whats going on. Our objective in the OTC should be to make money, and the best way to do it, is catch the movers when its moving, and sell it when its not, or else you get caught up drinking the kool-aid and go broke. The OTC is rarely made for investors, so pretty please, take care everyone. I am very sorry if I mislead anyone, I too was not paying attention to what was going beneath the surface, but now that I’ve opened my eyes, I will not let others get sucked down this rabbit hole without them knowing first with the facts that I have presented.
Oh, and now that you understand convertible notes and the true source of dilution… Here is the list of notes with maturity dates. Major Dilution headwinds coming this way. My honest suggestion is to get out now before these notes hit the float. Silver-lining; company can still pay off the notes but more than likely they won’t get cash in time to do so… and down she’ll go if the company can’t pay off lenders before shares hit the float.
(e)
Convertible Note due on February 28, 2018
On May 22, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $25,000 from total loan proceeds of $28,000, which bears interest at 12% per annum and is due on February 28, 2018. Legal fees of $3,000 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the average lowest two (2) trading prices for the previous fifteen (15) trading days to the date of conversion.
(g)
Convertible Note due on March 16, 2018
On June 16, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $47,250 from total loan proceeds of $64,000, which bears interest at 8% per annum and is due on March 16, 2018. Original issue discount of $9,000 and legal fees of $7,750 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the lowest trading price for the previous thirty (30) trading days to the date of conversion.
In addition, the Company paid an additional $4,725 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
(i)
Convertible Note due on April 10, 2018
On August 10, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $42,000 from total loan proceeds of $44,200, which bears interest at 8% per annum and is due on April 10, 2018. Legal fees of $2,200 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the lowest closing price in the previous twenty (20) trading days to the date of conversion.
(b)
Convertible Note due on April 25, 2018
On April 25, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $50,000 from total loan proceeds of $55,000, which bears interest at 8% per annum and is due on April 25, 2018. Legal fees of $5,000 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the average lowest three (3) trading prices for the previous twenty (20) trading days to the date of conversion.
(c)
Convertible Note due on May 1, 2018
On May 1, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $40,000 from total loan proceeds of $45,000, which bears interest at 8% per annum and is due on May 1, 2018. Original issue discount of $2,300 and legal fees of $2,700 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the average three (3) lowest closing price for the previous twenty (20) trading days preceding the date of conversion.
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(d)
Convertible Note due on May 8, 2018
On May 8, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $30,000 from total loan proceeds of $36,000, which bears interest at 8% per annum and is due on May 1, 2018. Original issue discount of $4,500 and legal fees of $1,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 45% discount to the lowest trading price for the previous twenty (20) trading days to the date of conversion.
In addition, the Company paid an additional $3,000 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
(f)
Convertible Note due on May 25, 2018
On May 25, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $47,500 from total loan proceeds of $50,000, which bears interest at 8% per annum and is due on May 25, 2018. Legal fees of $2,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the lowest closing price in the previous twenty (20) trading days to the date of conversion.
In addition, the Company paid an additional $4,750 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
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(h)
Convertible Note due on June 19, 2018
On June 16, 2017, the Company entered into a convertible loan agreement with an investor in the form of a back-end note. The Company received net proceeds of $20,000 from total loan proceeds of $25,500, which bears interest at 2% per annum and is due on June 16, 2018. Original issue discount of $4,000 and legal fees of $1,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 45% discount to the lowest trading price for the previous twenty (20) trading days to the date of conversion.
In addition, the Company paid an additional $2,000 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
ALL in my most humble and honest opinion.
