Global Prospecting Ventures Inc (GPVN)

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CD financing is usually in the form of preferred stock or a different class of common given to the recipient and converted later on into common stock which is then sold into the marketplace. Whether this will be toxic to the price depends on the agreement's terms, whether the financer follows them, and how fast they liquidate. Unfortunately, the terms (very important info here) were not disclosed.

The PR said the recipient will receive 200 CDs at $4,500 each. Usually the conversion rate is either based on a deep discount to the current market value when the agreement is signed or has a sliding scale to protect the financer from taking a loss. For the first case, let's say hypothetically they agreed to a 50% discount off Monday's closing (0.03).

200 CDs x ($4,500 / 1 CD) x (1 GPVN share / .015) = 60,000,000 GPVN shares.

When the CD matures, the financer has 60 million shares to sell off to recover his investment plus a profit. That's a lot of stock which could easily tank the price when sold unless there's some significant buying pressure or he does it very, very slowly. The second case is an even worse scenario because as the stock's price decreases the conversion rate is constantly recalculated giving the recipient more and more stock and could easily be much, much higher than 60 million. If there is no anti-shorting clause in the agreement, the financer could start shorting ahead of time.

Lebaneseproud is correct CDs are often toxic because of poorly negotiated terms done with shady financers. Most of these small public companies don't have the credit/assets to get favorable funding from large reputable financial institutions so they have to deal w/ the devil -- ie those who are willing to lend money to financially unstable companies. Without seeing the specific terms and the financer's track record, IMO it's hard to say whether this one will go the route of the majority or be an exception.