Penny Stock Guide

Newbie needs some stock terms explained.?

I have some shares in a penny stock, and today they released a news release at

It probably won’t mean anything at all to you, so don’t worry about it.

Essentially, companies can hold debentures in other companies. Debentures are kind of like bonds, in the sense that one company loans the other a large sum, and is guaranteed a fixed return on their loan (say, 4%). Many debentures are issued as convertible to common stock. Here’s an example:

The issuing company (XYZ Corp.) says, “I need a million dollars, ABC Company. How about this, I promise you, if you loan it to me, I’ll give you back 1,040,000 (there’s that 4%) in 1 year” (debentures are held for a lot longer usually, but let’s keep it simple for the sake of argument). ABC company considers it, then requests that, as an added incentive to the loan, they be allowed to convert the debt XYZ owes them into stock at a specific date, should they choose to.

So when this other company converts at the end of this month, the money that was previously owed to them by your company will now be turned into stock at the going market rate of $0.13. It just means that there are more shares outstanding now, and one company owns about half of them.

I know it’s confusing, but I hope that helps. :0)

NuEarth Corp.- Traded as NUEC – Company Highlight By CRWE Newswire