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PLelek

03/20/17 8:49 PM

#57290 RE: marketgirl26 #57289

Dilution.

Pegaso

03/20/17 8:52 PM

#57295 RE: marketgirl26 #57289

A group dumped today into news...

Carini

03/20/17 9:03 PM

#57298 RE: marketgirl26 #57289

Dilution.

When debt holders convert their debt into shares, they typically get those shares at around 50% of the lowest bid or trade price over the preceding 10-20 trading sessions (depending on contractual terms).

So ISBG recently had a closing bid of .0004. Assuming the usual terms for notes, that means a debt holder owed, say, $10k, can get 50MM shares for their debt if they were able to convert it in full today ($10k / .0002). So even if the PPS were to drop to .0004, they would still be making 100% on their loan. If the PPS was up at .0010, like today, they can sell those 50MM .0002's for .0010 and make quite the return.

People say "why would you just dump all those shares instead of holding them for a higher PPS?" Because there are already 3 billion ISBG shares out in the market, plus add in flippers and retail sellers, and that's a lot of competition to sell shares. Better to take the guaranteed 100-500% profit than hang around hoping along with retail that the PPS goes way up.

Convertible note holders don't care about the PPS because no matter what it is, they are always converting around 50% of the lows. If the PPS goes lower that just means they get more shares to compensate. They want liquidity, and a bid to dump into, and that's what tweets and PRs help create. Hence, all the selling on news. And every time that happens, there are that many more shares in the market that people are looking to sell into any increase in price. Today, for example, the cross- and t-trades suggest there are now 75MM more shares in circulation than there were yesterday.

The fact that the company raised the A/S by two billion shares this month prior to the news is just about the biggest red flag there is. They're using positive news to clear debt, which is good for the company, but usually disastrous for anyone who buys shares and holds them long term before the dilution is finished.

All IMHO.