In that example I quoted of a F/S while the pps was just a few cents - VGZ their reason for so doing was that they anticipated at the time that the gold price was about to take off. They felt their company had what it takes to justify a move with the POG and they wanted to attract more serious, investors who would not touch penny shares.
Even at a low of around .10 it could have still been knocked down by shorts had the gamble not paid off.
That could have happened to GWGO if say the Ask had been even as high as .0004 and the bid .0003. As soon as the ex dividend date arrived the shares would have dropped to .0001. if you could sell them. Why? Why not .0002? Because you would have had two things at work.
(1) the price adjustment - halving,
(2) The brokers dropping the price to deter and take advantage of the heavy selling that would come from profit takers.
You could also have had, possibly, a (3) from more shorts who would have got in before the masses if any buyers at over .0001.
What many forget is that though we are only dealing in fractions of a cent, the percentage between the bid and ask at .0001 and .0002 is very high. It is the equivalent of in Google the bid being say $230 and the ask %460.
How many Google shares would trade if that were so?
In fact, when you have market makers, as in the OTC, the MM in times of heavy selling will widen the distance between the bid and ask to deter selling
