The stock is losing investor interest. The management seems to be engaged in fraudulent practices. Dilute equity and sell it to investors. We think that the management bought it for a buck so 0.70 is a good bet but for the management is like shuffling the buck from one pocket to another and selling this junk at 0.70 cents.
The management announces something every now and then and disposes the stock to gullible investors.
I guess I was not very clear about what I was saying.
My statement was the management has placed a lot of shares at 1.00. (Older shares were placed at 0.40 cents etc.). What we as investors think that the management has committed funds to the company for a buck so it must have good value. My logic is say the management buys 1 million shares at a dollar so the book entry is 1 million shares sold and the assets side of the balancesheet shows a 1 million dollar deposit. We assume that to be good news but what the management can do is buy take out that cash with entries like loan or prepaid expense or something to balance it out. Then dump those million shares at 0.7 cents and rake in 700,000 dollars from us who hold the stock assuming that the management is acquiring shares at 1.00.
I am an auditor and have come across such circular transactions in small companies. Hope this makes it clearer.