Those are restricted shares that can not be sold so your theory is completely wrong!
Hank your scare stories sound good until you actually apply the real facts with this specific company.
I understand that a lot of pink sheet companies do a lot of the things you talk about and take advantage of the OTC rules to line their pockets at the expense of many shareholders.
However, in this specific case, with this company I think they have addressed their past and current situations in great detail via public disclosures and during their hour long earnings conference call.
They currently have a great company with very solid numbers, a great chart, strong trading volume and a very solid trading support level here.
Here are some relevant facts to keep in mind:
1. The CEO is an insider and the control person - so there are a number of rules that go along with that - he can't just sell his restricted shares at any time.
2. His preferred shares used to have 1000 to 1 voting and conversion rights and they have been lowered to 200 to 1 because they said they wanted control but not to have to issue too much restricted shares in the future to over dilute. It is VERY common for companies to amend voting rights of the preferred to remain in control and/or use as a potential poison pill to avoid a hostile takeover.
3. When he converted this preferred shares they were converted into restricted shares which means he can't sell any for 1 year (Which it has been less than 1 year.) And even then IF he wanted to sell any he would have to disclose that info with a filing as an insider before selling.
4. He clearly said in the conference call he has received offers to be bought out and has said no and wouldn't sell any under 5 or 10 cents and even then it would depend on the market and the size of the company, etc.
5. Dilution is not about how many times a company issues shares it is about a % of the total number of shares traded. So if a company issues 100 million shares and only trades 200 million shares during that same time period a 50% dilution is a lot but if a company issues 100 million shares while the market trades over 1 billion shares than it is only a 10^% dilution - which is very reasonable for a pink sheet company. It doesn't matter if they issued 1 million shares 100 times or 10 million shares 10 times. #'s are #'s they don't lie they just get twisted by people with personal issues and a desire to scare people.
6. You make it sound like the company can convert forever while they have clearly stated and documented what convertible debt they have and once that debt is converted they shouldn't have any more convertible debt so there is a limited number here. This also means that any smart debt holder doesn't want to dump no mater how cheap they can get shares because everyone wants to maximize what they have when there is a limit to what you can get. Why would they rush to sell when history shows being patient with this company allows you to make more.
Once again I am all for real due diligence with real facts but don't lie to people to scare them and tell them the CEO is dumping shares on you when it is not even possible with restricted shares and filing requirements, etc.
Let's stick to the facts and what we do know rather than speculate on the potential evils that could exist but we have no current proof of.
Good luck to all