Replies to post #293479 on ERHC Energy Inc (ERHE)

[Julius Erving]

MUST-READ: the Doc ran out of posts yesterday.

Somebody, who is Seeking for the light nailed the situation on the head.

Yesterday I truly thought the company was in jeopardy because of a death spiral of convertible debt. But it is NOT:



"It was just plain bad management to get to the point to where they had to do this type financing.

The convertible are TOXIC to the stock price but are not TOXIC in terms of dilution. They are not death spiral type because they are scattered between several different small investment companies who are located in all parts of the country. The convertibles also have staggered maturities and so it is not believable to think they are working together. IF....IF.... the total outstanding on the convertibles is still just $917,750 the total dilution if converted at .015 cents a share would be about 63 million shares or dilution of 8.3%.

Most death spirals are open ended [ no stated number of shares] with just one investment company and can cause a great increase in shares outstanding in a short period of time. Example: I once saw a company with what seemed to be a good idea in the internet field go from 12 million shares to 5 billion in about 3 years do a thousand for 1 reverse, and do it all over again."

Confirmation of what is stated here is in the 10Q indeed.
Search for: NOTE 4 – CONVERTIBLE DEBT.

Whether is was really just plain bad management to get to the point to where they had to do this type financing, I'm not sure.

By the way, where is Krombacher. Is he eating crow right now?