Ayala Pharmaceuticals Inc (ADXS)

[Gantor50]

BINGO !! NOW I think I understand why they get the WARRANT "Kicker" or "Sweetener" shares tacked-on. They GUARANTEE THAT EVEN IF THE SHARES GO TO $100, they ADAGE, can always exercise their $5 per share warrants, get the shares, and use um COVER THE SHORT "scenario" and make nothing but bank...pretty much RISK FREE.

THAT is where the warrants come in - it totally makes sense now. The warrant "guarantees" they can always BUY MORE SHARES LOW, in an amount to COVER THE SHORT position(s) they open, just as you described.

I think this sounds like the way it might work.

It's a way to mint money when you think about it. Hypothetically if you were a "name" fund, you buy into a tiny clinical biotech, which creates buzz and generates momentum of millions of shares on the way up. The kind of volume you need to short in volume. You turn on the HFT and get your buddies to run it up. Once it gets toppy, you short it as close to the high as you can.

Now you drive it down, down, down. As far as you can take it. If a buyout or something happens, you always have the warrants as a backup plan.

Oops...now you know the company is nearing major deals or milestones, it might even be up for sale. You want to lock in tens of millions in paper gains. But to cover you need millions of shares, and don't want to use your net long shares or the warrants. So you need to extract shares from others...millions of shares from others.

So what would a company in that situation need to execute? Maybe a relentless and merciless short campaign, timed perfectly to create panic selling, stop losses, and margin calls?

Hopefully you can scrounge up a couple million, maybe more? And if not you have to sell some of your own to provide the cover. But no worries, because you can re-add more shares back on the long side as you choose, after the short attack and cover is finally completed, building up inventory for the next rally and rise. Maybe you can rally ADXS to $20 and do it over again?

Or maybe if you really believe in the company you just stay long and end up with millions of shares you virtually got for free because they were all "paid for" by your pump and short the dump campaign from the very beginning?

Hypothetical, but if you could do it, it's a money printing operation.