Puget Technologies Inc. (OTCMKTS:PUGE) Rises Even Higher

Puget Technologies Inc. (OTCMKTS:PUGE) exploded up the charts once more yesterday, adding 28.38% to its market value in yet another session of frenzied climbing. But how long can it keep this up?

The ticker reached nearly one cent yesterday, and many investors saw this as a turning “breakout” point. However, it should be noted that not only investors keep an eye out for such thresholds. Holders of convertible notes do so as well, so that they can exploit the opportunity to cash in on the action while the stock in question is still liquid.

And PUGE has a lot of convertible debt that could be dumped on the market at any given point in time. Its latest financial report mentioned an outstanding note for a total of $775 thousand that converts into common stock at a 42% discount from the average of the lowest 3 trading prices over the 10 days prior to conversion, up to a minimum of $0.0005 per share.

This means that the noteholder can get his hands on shares that are currently traded for nearly a penny, as cheap as $0.0016. That’s more than six times lower than the current market price – and if PUGE‘s ascent continues in this manner, the gap will only get bigger in the next few sessions.

Investors should take a minute to contemplate the profits the noteholder can make on such conversions at the present moment. Then they should think really long and hard on what dumping up to $775 thousand worth of severely discounted PUGE stock can do to the ticker.

Of course, there is no way to know for certain when, or even whether, the company’s noteholders will take advantage of the situation. However, any investor meaning to try to make money out of PUGE should know the full extent of the danger that the company’s convertible notes represent.