What is the difference between these two possibilities? (1) I buy directly from a corporation a million shares of stock at one dollar each. (2) I buy directly from a corporation, for a million dollars, a debenture convertible into a million shares.
Which causes more dilution?
Insiders are wrong all the time.
It's very foolish to base your DD on one item. Especially when the balance sheet (most important) is at a huge deficit.
The big problem here is MASSIVE DILUTION.
Look at all the insiders trades here that are wrong, and this stock pay a 50% dividend:
Click on insider trades Bell:
4M bought in the last 3 months (Aug 15th); 500K sold
12M bought in the last 12 months; 1.5M sold
Integrated Power Systems still owns 4.5M shares from significantly higher prices.
Pinetree Inc still owns 8.9M at significantly higher prices.
"more seller" !!!! That's an understatement:
On October 22, 2008, the Company issued 23,776,225 shares of Common Stock to four holders of its Variable Rate Self-Liquidating Senior Secured Convertible Debentures due April 19 and September 1, 2009 (the "Debentures"). These shares of Common Stock were issued pursuant to the pre-redemption provisions of the Debentures.
that should read..."reduces the number of shares they hold (with a higher price)" i.e. equity value stays constant unless more selling (dilution) follows.
Note: If a company is profitable their earnings also increase with a reverse comparably so sometimes, but only rarely, a reverse split can be beneficial initially.