BEFORE INVESTING! Do the following steps to look at where your investment is headed.
1. Log onto this link www.OTCMarkets.com - When the new widow opens follow the instructions below and be prepared.
2. When you log onto the OTC markets, this appears. In the green box (quote) just type in a company ticker stock symbol and click enter or the search symbol in the same green box. Proceed to the next page.
3. The next page will show the overview, quote, company profile and other data. Click on the tab Security Details.
4. When the Security Details open up you can now see the companies stock structure. These examples show two companies share structures. One with a low float BUT last updated in 2014 but today in 2018 could now be in the tens of billions. The second shows the correct date BUT WOW look at the authorized! 99,999,999,999 (that s 99.9 Billion shares authorized) Note: Many companies s release billions into the float soon after they post the structure but do not update the actual figures.
An It may look like a decent OTC float BUT look when it was last updated!
The date is current BUT WOW look at the authorized shares!!!
5. After reviewing the security stock details, click on the Financial's link
A very large authorized means billions will be added to the float and a low float with an old date means to be EXTREMELY careful when investing in either company.
6. Look at TWO important things. Total Revenue and INCOME FROM CONTINUING OPERATIONS. When you see numbers in (1,009) it means negative. SO when ever you see 0 or a low revenue but the (Number in perenthasies) is high means the company makes little to no revenue YET has enormous debt. On the OTC all numbers are in 000s meaning the number below (1,009) means they have debt of $1,009,000.00 (negative)! Also note they last posted data in 2016 so the debt is probably much higher with still no revenue. Also KEEP your eyes on the DATES of the data.
Ill explain at the end why they have SO much debt and no revenue.
7. NOW go to the stocks you own and use this check list below:
A. Is the stock security data out of date or have 10's of billions authorized? IF so you are at RISK.
B. Does my stock have very low or NO revenue "COMBINED" with a high amount of debt. IF so you are at RISK.
C. Does my stock actually have any product that I can purchase before I choose to invest? IF not you are at RISK.
D. Does my stock have a price SO low its almost crazy not to buy some? If so you are at RISK.
8. How does an OTC stock with NO REVENUE, LOTS OF SHARES and massive DEBT make any MONEY? They simply issue shares of stock to have the debt paid off because of an SEC rule that allows a debt conversion possible.
Here is how it works.
An OTC company will amass lots of debt by creating a ghost company that the CEO probably owns or has an associate own. That private company will create some debt that the OTC public company now owes them. A $10,000,000 debt bill for a conuslting fee that is now DEBT on the OTC public companies finacnails as seen in example #6 above. Now that the OTC public company has that $10,000,000 debt on thier financials, they are now allowed to issue restricted shares allowing the buyers of the shares to pay off some of the dabt. A CEO will issue 200,000,000 shares (more or less) to an investor who then sells those 200,000,000 shares for $.05 or even $1.00 using a pump campaign. The investors sell those 200,000,000 shares and make $10,000,000. They then issuse $1,000,000 to the private company that holds the debt against the public company reducing the debt owed by the public company. SO the OTC public company keeps issueing 200,000,000 shares over and over untill the debt is paid. This is why you see 100,000,000 or even 1,000,000,000 trade in one day and get exicted there is trade volume BUT be aware its simply the issued shares from the OTC public company being dumped into the market by the debt conversion investors. As the OTC public cimpany sells and dumps billions into the float, the debt is eventually paid off.
SO the private company most likely owned by the OTC public companies CEO gets to KEEP all the money that was paid to reduce the debt and those who got the shares that were dumped and sold in the billions also make serious cash just like the ceo. Eventually the OTC public company will not post news, go dark, not answer calls and even just fold as the stock tanks from $.05 down to $.0001 when the same people who paid more will buy more to cost average thinking it will make a huge comback and they rarely ever do.
SO with the data above showing no sales, huge debt and no products other than a great PR or news release, the ones that make the MILLION$ are not the share holders but the CEO and those who the shares were issued to who dumped them into the market.
Its all legal and seems to be the norm on the OTC. Its just the way it is. Everyone gets rich but the OTC penny investors.