Jacksam Corporation (JKSM)

[adijas]

Did you understand the 8k? It only sais they have a line of credit for $250.000. This credit is not convertible, but is a loan:

Each request honored by Lender for an advance of funds against the line of credit will bear interest at a rate of 12.0% per annum

Or are you referring to this sentence?

The Lender is affiliated with Altar Rock Capital, holder of a warrant to purchase up to 5,000,000 shares of our common stock at an exercise price of $0.001 per share and, further, a holder of a convertible debenture dated December 1, 2017, in the principal amount of $100,000 which is convertible into our common stock at $0.20 per share.

Guess what, that was all in the 8k from 9/17. And those convertible debenture at $ 0.2 is already converted into the right to buy shares (Altar Rock Capital is holding $100.000 of the total amount):

(i) the rights to purchase common stock of Jacksam as contained in those certain Convertible Debentures of Jacksam (the “2017 Debentures”) originally issued between November 2017 and January 2018 in total principal amount of $1,743,500 and issued and outstanding immediately prior to the closing of the Merger were converted into a corresponding right to purchase shares of our Common Stock at a conversion price of $0.20 per share, or 8,717,500 shares in total

But do you have to be afraid for big dumps? No. Why?

In addition, the holders of the 2017 Debentures have agreed that, prior to December 1, 2019, no holder will sell shares of our Common Stock in excess of the volume and price limitations set forth in that certain Lock-up and Leak Out Agreement dated December 1, 2017.

So what is this Lock-up and Leak Out Agreement?

Restrictions on Sales; Volume Limitations. Beginning the sooner of: (i) December 1, 2017, or (ii) immediately upon the effectiveness of a registration statement as declared by the U.S. Securities and Exchange Commission, in which shares of the Stockholder’s Common Stock have been registered, iii) Or sales permitted under rule 144, the Stockholder shall have the right to effect weekly open market or private sales of his Common Stock in an aggregate amount equal to:

a) 5% of the daily volume between .01 and .75

b) 10% of the daily volume between .76 and 1.25

c) 15% of the daily volume between 1.26 and 1.75

d) 20% of the daily volume at or above 1.76

i) if during the Leak-Out Period the share price of the Common Stock (‘Share Price”) has fallen more than 10% in a given day, all stock sales shall be halted.

ii) At no point will Stockholder offer more than $5,000 dollars worth of shares at any given time.

iii) At no point will Stockholder sell at the bid.

iv) At no point will Stockholder put a limit order that is less than 10% below the current VWAP.

In other words, until december 2019 dilution will be very small. To give an example: in the 'worst' case, when the stock trades above 1.76, the can convert 20% of the volume, as long as it stays under $ 5000. So if volume is 20000 (which is a lot as you have seen), and the share price is $ 2, they can't dilute 4000 shares (20%) but only 2500 shares (2500 x $ 2 = $ 5000). And the good thing is the can only dilute at the ask. So no dumping of shares at the bid! And if the PPS falls more than 10%, they can't dilute at all! And last, they introduced a VWAP to limit dilution (Volume-weighted average price (VWAP) is a ratio generally used by institutional investors and mutual funds to make buys and sells so as not to disturb the market prices with large orders. https://www.investopedia.com/terms/v/vwap.asp)

So yes, there may be some dilution, but very slow and only on the buy side. Why? They obviously dont want the PPS to be ruined. You can't have more shareholder friendly conversion rights than this!!


And there are more restictions:

- holders of the Jacksam 2017 Debentures would hold, upon conversion, 8,717,500 shares of our Common Stock – provided, however, that no holder of a 2017 Debenture may convert if and to the extent such a conversion would cause that holder to be the beneficial owner of greater than 4.99% of our issued and outstanding Common Stock;

- holders of the Jacksam 2018 Notes would hold, upon conversion, 1,666,667 shares of our Common Stock; and

- Altar Rock Capital, as holder of the Altar Rock Warrant, is entitled to purchase up to 5,000,000 shares of our Common Stock at $0.001 per share– provided, however, that the Altar Rock Warrant may not be exercised if and to the extent such an exercise would cause the holder to be the beneficial owner of greater than 4.99% of our issued and outstanding Common Stock.

So that people are selling because of this 8k is just stupid. Obviously they didn't read the 9/17 8k.

Second, you want a low float stock with high volume and a small spread. That is a contradiction. Low floats do have big spread and low trading volume. That means they are very volatile. A little bit of buying pressure can sent this up a lot, but it goes the other way around too. Selling pressure let it go down fast. So in a way you should be happy with the slow dilution on the ask that will happen. More shares in the float, less spread and the pps going up.

And last, you say this is a typical otc stock. I have a different opinion. When you do some research on Convictium, you'll see this is a real company that is growing fast. The fall in the share price last Friday isn't caused by a typical OTC diluting company, but by shareholders that don't understand filings and panic if they read the word 'conversion'. Personally, I wouldn't mind if they keep selling. Gives me the chanche to pick up some more.