"crazy scared these SHORTS are"??? There is NO SUCH THING as "shorting" a 5 penny stock unless you are a professional, institutional trader- as in the finance firms who are providing cash for shares to BHRT. PERIOD. If there is any "shorting" taking place- it can only be taking place via firms who are broker/dealers on the pink/OTC markets as licensed, professional traders. A retail investor can NEVER, EVER, EVER get "short inventory" on a penny stock, usually not on anything under $5 and certainly not on a stock under $1. You give us the names of any brokerage you know, that we can call up and get short inventory on BHRT- I'd like you to prove it. Give the name. TD, E-Trade, whoever it is, tell us. Any "shorting" is being done by firms like Asher or Grey or numerous others with whom BHRT has WILLINGLY entered into deals to swap SHARES FOR CASH- and those deals carry a "convertible" option in what is known as "death spiral" financing. Read the BHRT 10-Q's and look for shares for cash and the word "convertible" it's plastered all over um. The firm providing the cash 1) Gets a STEEP discount to market on their shares- read the 10-Q's, it's been 40% to 60% or so on recent deals. They then get an option/note attached to the deal which gives them insentive to short the stock and cover later for an ever larger profit.
Death spiral financing is a process where convertible financing used to fund primarily small cap companies can be used against it in the marketplace to cause the company’s stock to fall dramatically and can lead to the company’s ultimate downfall.
Many small companies rely on selling convertible debt to large private investors (see Private investment in public equity) to fund their operations and growth. This convertible debt, often convertible preferred stock or convertible debentures, can be converted to the common stock of the issuing company often at steep discounts to the market value of the common stock. Under the typical “death spiral” scenario the holder of the convertible debt initially shorts the issuer’s common stock which often causes the stock price to decline at which time the debt holder converts some of the convertible debt to common shares with which he then covers his short position. The debt holder continues to sell short and cover with converted stock which along with selling by other shareholders alarmed by the falling price continually weakens the share price making the shares unattractive to new investors and can severely limit the company’s ability to obtain new financing if the need arises.
An important characteristic of this kind of convertible debt is that it often carries conditions like a quarterly or semi-annual reset of the conversion price to keep the conversion price more or less close to the actual stock price. But a lower conversion price also increases the number of shares that a bond holder gets in exchange for one bond, increasing the dilution of existing shareholders. A lower price reset can also force investors that have set up a long CB/short stock position to sell more stock ("adjust the delta"), creating a vicious circle, hence the nickname death spiral.
The companies that are willing to agree to financing on these terms are often desperate and could not obtain funding through any other means. The terms, though viewed by some as onerous, give the lender a potential way to recover their debt regardless of what happens to the shares of the company. The lender would have a potentially greater gain if the shares were to increase in value but if they do decrease in value, there is some protection. If this were not the case they would probably not be willing to lend the money given the poor risk profiles of the companies interested in this type of financing.
LETS JUST STICK TO FACTS, OK??
AI
