Below is a post that my business partner posted on our site over 2 years ago. Royrogers is a seasoned veteran of the Vancouver Stock Exchange, and he offers this explanation regarding a particular stock but further explains..

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One of my goals is to educate my viewers as to what goes on behind the scenes in a penny stock play. by explaining what this is, it will help you the mechanics of some trades you see, and thereby increase your ability to interpret the trading. This is timely in that Ann will be a good working model to watch and learn in a field training exercise

What does the term ‘mean when applied to the penny markets?
Basically it is the process whereby free trading stock is exchanged for “lettered” or paper with a hold on it…for example a 4 month no trade restriction from a pp

Why and how is it done

IT is done usually and arranged with a friendly to the insiders arrangement. To do a pp as AAT has arranged at 6c, there is a mandatory 4 month hold on the stock issued. Rather than retail customers such as you buy this, a person with a large position will sell it at 6-8c and replace it with pp restricted stock. It gives us the advantage of a liquid asset and the company gets the needed financing.. It works for the seller in that he is a long term investor with more free trade in the event of price increase. he is in for the long term and accomplishes funding.A 4 month hold is of no concern.

How it effects the market

It challenges the markets evaluation of the stock price in that shares that would not normally be for sale become available due to market circumstance. The company needs money for working cap and for expansion with thier many new contracts. It can mean death to some stocks that are n bad shape
In AATs case, the strong demand at the two year high indicates that market sentiment indicates a growing company with brighter days in store. The volume continues to increase. I would expect a price increase when the pp is completed in the 10-12c range
Hope this helps
Remember this is not specific to just AAT but to any company in the midst of refinance. It can be applied to major stocks as well
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attention royrogers
happy trails
rr