Replies to post #41 on Corey Ribotsky's N.I.R. Group AJW Funds Downward S (LOSE)

[TEX]

Heyyy...JW

good to see you out and about!

Basically, debenture equals debt.

Remember from "American History 101" about debentured slaves?

errrr, workers, I mean...

Convertible translates to exactly that..."converting" money/dollars/debt into stock...at a steeply reduced rate from the market price.

Bottom line? once you make a Faustian bargain like this, they got you coming and going...

They're converting at a discount, so they can profit mightily into a run.

Then, they're big enough, off-shore enough, to short you coming down...

[mAjOr dAmAgE]

Alot of convertible notes are like this in English. We'll loan you $100,000 at 8 percent interest. You pay it back in one year. If you default, you pay us shares as we request, but we want them at 50% or 25% of the lowest trade over the last five sessions.

So, if the shares trade between $.01 and .05, they use .01 as the base, then they pay half or a quarter, so .005 or .0025 for the shares that could be sold between .01 and .05.

So they normally only convert what they're owed in interest -- that way, they are always owed shares forever and ever and ever, but they still make about $25,000 to $100,000 on the convertible note per year.

That's the deal. It's also why the price of these securities fall, because they don't hold. They just dump them at the bid.