I know this may sound insane but I am investigating a company I have shares in and have discovered that they converted USD 3200 in loans from friends and officers with a conversion price of USD 0.0001 per share when the share price was at USD 4.60 per share. They also did the same with USD 32,485.00 in convertible debt and posted this in the S1 filing stating "The Company evaluated the convertible notes for a beneficial conversion feature in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company determined that the conversion price was below the closing stock price on the commitment date, and the convertible notes contained a beneficial conversion feature. The Company recognized the intrinsic value of the embedded beneficial conversion feature of USD 32,485 and USD 3,200 as additional paid in capital and reduced the carrying value of the convertible notes to NIL." Now what would you folks call this? How can this be possible? Would this not be the first time in market history that a company would set a conversion ratio for debt into shares at 10,000 to 1 and at a conversion price 4.6 million percent below the actual share price? HELP!

  • $\begingroup$ Sorry about the formatting glitches...not my fault :) $\endgroup$ Commented Jul 10 at 6:09
  • $\begingroup$ ... dollar sign has a special meaning for stackexchange, best to avoid it $\endgroup$
    – nbbo2
    Commented Jul 10 at 16:46
  • $\begingroup$ Thanks for your input $\endgroup$ Commented Jul 12 at 1:26


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