Here's how these "Smallcrap" companies work the magic in my experience. First you use some shares to buy some promotion from some professional stock panderers to tout your "undervalued" wonderfullness to the email world. Release some wonderful press "projecting" out of this world revenue generating business with the most illustrious business partners available. The get rich quick suckers read the press, not the financials of the company. and buy into the dream. Then the company or the debt convertable holders sell into the demand like wildfire, and since they can always get their shares at a discount compared to you the retail sucker (that's in the filings also)you scratch your head wondering what went wrong. Then you A. Admit you might have been wrong (not bloody likely) B. Average down, ( the thought gives me shivers) C. Sell at a loss, a small one if you're lucky. D. Buy a handgun at a discount chain store and go looking for the rapist that did this to you in the first place. F. All of the above. G. Finally come to the realisation that the whole system is set up to get you to give them money to pay off their debt. In this case that is in the millions. As they sell the shares, the price naturally declines, so they need more. Thats not a problem, not for them anyway.