Tenderloin, Unfortunately Fusion can dump plenty.
Your quote of the 8-K documents shows 2 issues that seem to give shareholders confidence that may be unfounded.
First, because the initial purchase shares are unregistered they can't be re-sold and second, Fusion agrees not to short, sell or transfer the 3.5 million Commitment Shares for 25 months.
Neither of these is what they seem on the surface. I'll address them in two different posts.
First, although the shares are unregistered at this time, e.Digital is required to file a registration statement within 10 days of 1/2/2007 (see the "Registration Rights Agreement").
When the registration is declared effective, all of the shares will be registered and able to be resold (including the 3.5 mil shares). Fusion is so serious about this that they won't even give e.Digital the other $250K until this registration statement is filed.
2. REGISTRATION.
a. Mandatory Registration. The Company shall within ten (10) Business Days from the date hereof file with the SEC the Registration Statement. The Registration Statement shall register only the Registrable Securities and no other securities of the Company. The Investor and its counsel shall have a reasonable opportunity to review and comment upon such registration statement or amendment to such registration statement and any related prospectus prior to its filing with the SEC. ...
So they want the securities registered for resale ASAP. Additionally, they want only the securities for their deal registered immediately, but the registration can't include currently reserved but unregistered securities owed to the former 12% note holders (who have all now converted) and shares to be used for paying the monthly installment payments on the Davric note or for Davric/Polis to convert the loan to shares.
Fusion is free to sell its purchase shares any time after the registration is effective and it looks like they want to be able to unload their purchase before the others, who apparently will have to wait for a future registration so they can sell to recoup the money they loaned to the company.
The stringent requirements for quick registration (and several other registration requirements in the Registration Rights Agreement) certainly don't look like they are buying for a long term hold, but more to having a priority position to sell.
AI
