Colorado Goldfields Inc. (fka CGFI)

[blue dog]

Here's my rearguard catchup on convertible debt... for dummies, or at least by a dummy.

I still did not follow the details, but someone please tell me if I have this right in principle.

The convertible debt is a type of commercial paper valued at some amount (say, $1.00). When the holder goes to redeem it at a share price, the thing as a wildcard for the number of shares at the share price, so that it equals the number of shares necessary to get the amount.

For example, if the share price is $1.00, the holder sells one share when it converts the debt. If the share price is $.0002, the holder sells 500 shares. So the same intrument is always worth its amount (here, $1), and the holder does not give a damn whether it sells 1 share or 500 shares to get that amount.

Is that right?