HrH:
That is an excellent article with a very simple explanation as to how "death ride" (also known as "toxic" convertibles work. the Series D and Series EE, though toxic, are not full-blown death rides as they have as "soft floor" that is related to the lowest price at which e.Digital offers common stock. That soft floor is currently set at $0.19.
However, if e.Digital offers any stock at a lower price, it will drop the floor accordingly. I anticipate that they will indeed do so in the not-too-distant future. I don't believe the company has any capital stock left to sell, so they would likely have to wait for approval to increase the number of A/S and then register them.
The article also explains that in order to engage in the covered shorting to which the covenants grant them, they would need to use Canadian brokerages as EDIG is not marginable.
The holders of the Series D and EE CP shares are in a bind as the delayed registration has allowed the price to drop below their conversion price. They need to pump the price back up on high volume. I'm sure they also hope the company will sell some stock much lower.
Right now, the strategy is to pump as much as possible to entice some buying. Expect that effort to step up when the SEC declares the S-3 effective (which will not likely be announced by the company). I would not be surprised to see a fluff PR used for pumpage fodder.
They need the usual day and swing momo traders to jump in as well to get the volume up. However, the last little pop lasted only half a day as the a couple of the momos alerted the others as to the recent dilutive filings.
Those who are considering aadding to their position at this time need to be aware that the financiers and traders need bagholders to buy the stock they want to sell.
The CP share financiers have huge bags of newly minted stock to convert when it is registered. Right now they are holding the bags but they want to entice others to be the ultimate bag holders.
That's what the agoracom board has always been used for. As more shareholders are becomming aware of how the financings work and that bagholders are needed for the financiers to profit, the shills are beginning to become more obvious.
Their intolerance for dissent and even simple questions is opening more eyes as well.
As it is now, I would definitely not be a buyer at this time.
