Isodiol International Inc ISOLF

RE:Ok. Investor turned basher here. But

[kazzman]

Yes, it has the appearance  of death spiral funding firm doing floorlesss convertible loans. Only a crazy newb would ever deal with them. 

Just so you understand.  

You set up a draw down with them.  So let's say they approve you for 2 million dollar draw downs.  An insider will put up 4 million dollasr worth of stock with them.  They say it's "collateral".  It is PA'd so it can be sold/name changed etc.  It is in a legal agreement that if the funds are not paid back they get to sell it.  Otherwise , the loan is at X% . 

So the company calls the death spiral lending co. .  Says we need need 1 million. They get it. Death Co. has the right to buy 1 million dollars worth of stock at a 20-30% discount to market in the contract within 15 days at the average trading price of those 15 days.  So what do they do?

They short it to death (and remmeber have that 4 million share collaateral...so technically they have "borrow"...and technically they don't even have to declare as a short sale as they have the stock ) and once they knock it down 10-???%  the price is set and they draw down the stock at a 20-30% discount to the already killed stock price.  Covering their short.  

So ISOL gets cash without doing road shows and kissing butts...its easy money.  But it's costly money and not good for the shareholders.

These are floorles convertibles debentures.  These wree common in the late 90's -early 2000's .  Thomson Kernaghan and a guy named Mark Valentine did them often and the firm was shut down by regulators.  It appears these have come back (just like the mortgage backed securities that sank Wall St).  

I'm not saying the firm in question IS one of these.  One can look at dates of engagement and trading patterns and draw their own conclusions.  

If it looks like a duck and quacks like a duck it usually is a duck.