what a flippin joke, page-3

The sell off today seems to have coordinated

For much of today, buy and sell depth were pretty even

When the big sells went into the 0.9 buys, and almost all gone, pretty soon over 10M in support further down was removed to create panic, and now it is 49M buy to 71M sell, a difference of 20M which is significant given it is 40% of the buy depth, hence it seems so large it would be coordinated or definitely intended by someone to try and buy more lower.

End of year tax loss selling is affecting the share price but so are the options affecting the price as many have already pointed out, but they affect the price in two ways.

Firstly, many buyers would hesitate, given if they buy shares now, there would be dilution. Some here think that because the company receives money, then there is no dilution. This i believe is not true, because although there is no dilution to the market value of the company, there is indeed dilution to the value of each share because there are more shares on issue.

Hence why would someone consider buying just before a company increases its number of shares by 30%? People might still buy now if there is a very high probability of news making the stock sky rocket. Having said that, I am aware of recent announcements and comments here on HotCopper.

The following example illustrates my point about share value dilution. I rounded the figures to make it easier. If the product launch comes after these 380M options expire worthless, then it is more favourable towards those who already hold shares, you need to keep this in mind.

Scenario 1: Full product launch before options expire worthless and Market Cap of $25.7M made of 1 billion shares at 2 cents and 380 million options exercised raising $5.7 million.

Hence in scenario 1, the MC is $25.7M and those who had shares but no options have their shares worth 2 cents each.

Scenario 2: Full product launch after options expire worthless and Market Cap of $25.7M made of 1 billion shares at 2.5 cents each

The market cap of the company would be equal whether the product is launched before or after options expire.

If the launch is held off so that options expire, then current shareholders make an extra 25% profit, all for the sake of holding for a few more weeks.

You may say, companies cannot do that because of disclosure rules. True, but they can say they need to get more things ready and delay announcements, that is why there seems to be more company announcements from ASX companies after the DJIA has had a good gain. Coincidence, i think not.

This brings us to the second reason why the options are affecting the share price.

Some here for the past few weeks and months were saying the options will be in the money because it is in managements best interest to get them into the money and so they will do whatever they can for the options to be exercised.

If you believe the management would operate according to whatever the management believe is in their best interest, then the management will delay any re-rating announcement so that the options do expire worthless. Why, because as i showed above, their shares and options would be worth more after 30th June.

The amount of options expiring for directors now (30th June) compared to December 2011 is: See the "Change in Directors' Interest Notice" 6th December 2010.

John Palermo now only 273,515 but December 6 million
Quirk now only 178,572 but December 4 million
Found now 0, but December 1 million

The directors options that expire in December would be worth a lot more as shares once the current 380 million options expire worthless.

I am not accusing management of any wrong practices, I am just throwing up scenarios to those who in the past have said management would do what is in the best interest. Just like you consider what is in the best interest for you, they may consider what is in the best interest for them.

Also, 31st May 2011, positive news and the next day an Appendix 3B with very few options converted, reminding all that there are 380 million of them and helping stop any share price increase. Is this a coincidence?

Then why did it happen again? On the 15th June there is Product Distribution announcement and then the next day there is another 3B announcement (saying options are converted) on the 16th June, which resulted in keeping a brake on the share price from increasing. Yes, it takes time for conversion but what amazing timing.

I wonder in whose best interest was it for these two 3B announcements saying options were converted?

I hope it was not management and I am not saying it was but what I am saying is that management definitely had enough options to convert those tiny amounts announced on 11th May, 1st June, 8th June and 16th June.

The cream is great with huge potential and I have many shares. I appreciate the positive outlook by rebel1 but i also consider the comments by santoo2 regarding the company's track record.

Although many of you regard santoo2 as negative, personally i do not agree with all they state, however, there seems merit in the comment that the pump to 1.7 was manufactured to get the sophs to offload their options.

Between a positive attitude that only sees everything as going great and a negative attitude where everything is seen as completely hopeless, lies reality. Being positive and being negative has cost me a lot. Being realistic is always better and then thinking of what steps may be taken to deal with the situation. I find the knowledge of Surges very helpful, the realism of nathanblack very helpful for my thoughts and a big thank you to everyone else for your comments. All the best for everyone.

You may not agree with what i wrote but can you see where I am coming from?