Let me clarify a few things regarding the share structure and the convertible debt situation. First, ERHC’s authorized shares are capped at 3 billion, and any increase to this limit would require a formal change to the company’s articles of incorporation and bylaws, which we have not seen. What ERHC has done in the past when approaching its authorized share limit is to execute a reverse split. This increases the share price while proportionally reducing the number of outstanding shares, creating room to issue more shares through convertible debt while remaining within the authorized 3 billion cap.
Now, regarding Offor potentially gaining 90% of the shares outstanding: It's conceivable that he did so through convertible debt conversions. For example, if he bought $250k of convertible debt with a covenant allowing conversion at 50% of the market price when the stock was trading at $0.0002, he would convert at $0.0001, receiving 2.5 billion shares. While this may not have been the exact scenario for the reported convertible debt, it’s certainly possible that additional convertible debt could have been issued under gag, which may have allowed for further conversions at such favorable rates.
However, no new reverse split has been reported. If shareholders like my group own 55% of the shares outstanding, then every share beyond the 3 billion authorized shares would have to be accounted for. Since no reverse split has occurred, any shares beyond the authorized 3 billion must be naked shorted shares. This aligns with my point that substantial short interest exists due to the mathematical impossibility of issuing more shares beyond the authorized limit without a reverse split or other corporate action.
In short, the situation points to the existence of naked shorting, as the number of shares being traded exceeds what should be legally possible (if Offor really did convert that many shares) based on the authorized and outstanding shares. So, rather than dismissing the reports or assuming everything is ‘totally different by now,’ the numbers strongly suggest substantial naked short positions.
Krombacher
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