Replies to post #68241 on DD Support Board and Research Team

[236T568]

you would just wing it

ha!

wow that's a lot of shares. if you don't know how much you owe in convertible debt, how do you ever determine your cash needs (to service the debt, if nothing else) or the A/S you need to reserve the number of conversion shares?

[Arthur]

As I understand it, for convertible debentures, the GAAP suggest that you issue immediately enough shares to cover all the possible conversions of all the outstanding CDs. (If your share price goes down, you may have to issue more). Those shares are kept as treasury shares until a CD tranche conversion is requested.

Of course, no penny stock does it this way.
Some just issue shares as needed, and raise the A/S as many times as necessary.
Others put the CDs in a "derivative". The as the share price goes down, the derivative goes up.

Since it becomes impossible to estimate the float of a company that issues new shares all the times without warning, I figures those are the companies that get flagged as non-DTCC-compliant.