say a company has one million shares outstanding and 10 investors have bought 100,000 shares each @ one dollars
so now that company pps goes down to say .25 per share and is tight financial for cash to go forward so they issue one million more shares to an hedge fund for .25.
They just raise 250k in financing and now has 2 million shares outstanding.
orginal investors 100k per went from to 25k
now needing even more money and cant get a bank loan they need money to get their business model out and the pps is down to .01 because the hedge fund shorted the .25 because they had a converable as part of the original .25 buy
so now the company does another underwriting for a billion shares @ .01 raising a million dollars
Now that oringinal 100k investor is sucking air and in order for the shareholder to make money one will need the next ibm
management management management
and if smart money should have been raise when it hit .18 and this mess could have been avoilable, but management is still in bed with the same people that did this and then makes new agreements with them