Dragni Dragnev

Innovus Pharmaceuticals Inc. (OTCMKTS:INNV) Breaks New Boundaries

by Dragni Dragnev July 26, 2016

There could be little doubt that this most recent climb was made possible by the announcement that the company has secured $2.5 MILLION worth of funding. Investors seem to have universally taken that as excellent news – and to some degree, it is just that. After all, INNV needs the money in order to continue functioning until it can start rolling out its products.

However, on the flip side, said debt carries provisions allowing its holders to transform it into shares of INNV's common stock at “a conversion price of $0.25 per share”.

That's a bad enough red flag to give investors pause in and of itself – and things get even worse if the company happens to default on the debt. Should that happen, and since we're dealing with an OTC Markets entity, investors ought to be sure that the chances are not exactly non-existent - the conversion rates become as horrendous as “75% multiplied by the volume weighted average price of the Common Stock during the ten (10) consecutive trading day period immediately preceding the later of the Event of Default” or even “60% multiplied by the lowest daily volume weighted average price of the Common Stock during the ten (10) consecutive day period preceding the date of conversion”.

Taking on toxic debt is hardly reassuring – then again, this should be nothing new for INNV investors. After all, we're talking about a company whose last 10-Q showed that it already had $1.32 million worth of convertible notes that could be transformed into shares of the company's common stock at a rate of $0.15 per share.

With this in mind, it should be obvious why investors should not give into hype and regard INNV with the diligence and vigilance it warrants. To do otherwise might well prove disastrous.

 

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