EcoloCap Solutions Inc. (fka ECOS)

[deal guy]

IMO this is similar to the approach used to place by Tonaquint with respect to their convertible notes in ECOS.

I would not be surprised that some of the recent volatility is a short position put on by a convertible debt holder since they are nearing cash out of their convertible notes. You just keep shorting since you have have a share delivery from ECOS coming. Since you are going to receive shares at a discount to current market (discount can be 40-60% off of trading price) there is limited downside in continuing to place and rerolling your short.

I have seen where noteholders getting restricted shares will short until the restriction lapses. Thought the longest I have seen is about 3 months.

If the OS is not going up and their is extremely large trading volume (like we have seen the last few weeks) in the stock it would not surprise me that this is just a short trade preparing to cover a cash out.

The one caveat at the bottom of the article is that the issuer should be current in their filings. That is to protect the company and its officers under the Securities laws when they deliver shares without a registration statement.

If done right this is perfectly legal, but it does dilute the value of the issuing company. Every share issued at a discount effectively takes value away from other shareholders. You do this financing because you can't get financing in the real market.