Muscle Pharm Corporation (MSLPQ)

[Madcowelixir]

and for the naive

The 14m warrants are the kiss of death in these instances, just like what proceeded GNC's bankruptcy.

GNC was still profitable but had expiring bonds that needed to either be rolled over by existing financiers or new bond issue before the expiration date on the old bonds. If I remember correctly the old bonds had an 8% interest rate (compared to MSLP's 29.9% interest rate).

The existing (convertible) bond holders refused to extend the maturity date and forced the company into bankruptcy despite $2B in revenue and bottom line profit.

Why did they do this? Defies logic, no?

Because bond holders near always protect their investment by shorting the stock in which they hold convertible bonds.

Do the math.

GNC was trading at $30 for instance when you become a convertible bond holder. Short it at $30 and any downward price is profit. If the stock skyrockets or experiences a short squeeze, you are completely protected by the conversion price, therefore you have the bonus equity supply to cover your short. BTW, that never happens. Nearly every instance of the equity goes to ZERO as these junk shylock financing arrangements are to allow the insiders and others to liquidate off the radar in dark pools or other arrangements.

Don't forget (as SLC recently posted), tomorrow is the day Ryan's convertible price is set on the ~$3m emergency injection required when MSLP ran out of cash when all the suppliers cut him off and sued him.

AND DON"T OVERLOOK the fact that in Ryan's latest 29.9% "financing" deal that is actually a ~200% cost, the financier required HALF of the 29.9% statutory interest payment UPFRONT even though it is only a 365 day term. Wow.