I am thinking about how to trap shorties and I am to send the company this. This will be used as well if I happen to get a company up and trade.
What we know:
1) 208 million shares in o/s with 153 million in tradable float
1) 75 - 100 million in certificates (will use 75 million for this purpose)
2) 55 million in restricted shares
I don't believe that 55 million restricted shares are in certificate. There for total shares that are in tradable float that is outside certificated and restricted = 208 - 55 - 75 = 78 million shares
I don't know who hold certificates shares but likely insiders.
Out of 78 million float out there. I believe that longs here probably hold all.
If my calculation on shorted is right, then we have 30 million shares held by some investors.
The strategy:
1) if the company already make green or have extra cash flow, it can offer to buy shares at certain price. Then retire o/s down to gain control of shares o/s out there. 78 million shares reduction would be sweet as insiders control all the rest of the shares plus 30 million shares other investors hold.
2) if the company is not make the green yet, it needs to announce its finding about shorted shares after get confirmation from FIRNA or other sources ... get the roaster of people who hold shares at certain date. This will be a way to verify how many shares are shorted total.
Suppose the total shows 30 million shares are shorted. Go on step 3:
3) Announce what they are planing to do ... to get short to cover at high price or bring them to court or have a hearing about this ... Then offer investors to convert their common shares to prefer shares.
This step will hope to gain control of common shares that are not in control of insiders.
Insiders will convert their shares to prefer shares. Restricted shares don't need to be converted as it is restricted and knowing that those shares are to be sold into public till all the plan is executed fully. Also this will show that shares out there are naked short selling shares.
The more control of shares by the company having common converted to preferred is the most desire.
4) At this time there is no more legal shares left in float. Shares that are traded are shorted shares. The company brings this to SEC and agencies .. maybe request a hearing.
5) Now PPS will start to go up as shorties will want to cover before their covers are blown and lead to other investigations into other stocks. But no share left to be bought, just very few. PPS will rise quickly.
6) However hard they try to push price up for people to sell, they will still have naked shorted shares as shares left are locked up in restricted common. They will have to come to the company making an offer to issue more shares.
7) at this time the company can demand very high premium to issue more shares. As a result, money will go into the company after the new shares issued. The book value will increase. At this time, prefer shares can get special dividend then convert back to common stock. The company will have plenty of money to growth its business plan, shareholders get large appreciation in pps. etc.
