SmartMetric Inc (SMME)

[John_Vallay]

It does not need to be insolvency in the "OTC" world.

As an OTC company SMME is allowed to borrow money, via convertible note, which allows the investor to sell shares on the open market.

The convertible note for lack of a better term is a death spiral, meaning the stock will be sold at lower share price numbers but the investor keeps getting more shares.

In simple terms - Chaya sells shares at a discount to market.
The investor sells the shares and keeps giving new convertible notes.

retail Investors (mostly uneducated and don't understand convertible notes) will buy shares on the open market allowing the investor to keep giving money to the company.

The stock will continue to go down, and at some point the company will do a reverse split and the entire process keeps going.

The CEO of the public company is happy because (s)he keeps getting money.
The investor keeps giving money because he gets shares at a discount to market which guarantees a profit.

It's a suckers game - the suckers are retail investors that read press releases and believe something or have a pipe dream