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Gee... I Hope Whoever Is Representing Us
in Houston at the Venture Capital forum bears this little bit of wisdom in mind from F.I. at the Bull (especially the last sentence!)...
"The type of venture capitalist that writes deals with pink sheet penny stocks love them. Here's a typical deal: A $4 million LOC at 8% gets them $8 million dollars in restricted stock so they make 100% right out of the gate. Then the loan is convertible at 20% less than the stock has sold for during the preceding 6 months. Death spiral.
Why such usurious deals? No filings.
The whole thing is ruled under Catch 22. You can't get off the ground without money and you can't get money at a workable cost without getting off the ground. Getting money at an unworkable cost dooms the stock which dooms the convertible rate for shareholders.
And the cure starts with filings.
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