chris,
Good question....and the answer is obvious. No one would want to sell at .0004 if people are buying at .0005.
BUT, if the .0004 were not a pre-arranged buy, then it could also be other things...such as more dilution. Float in the extra shares to the MM's at .0004 so that they can sell them at .0005.
Although nobody but nobody likes dilution, as long as revenues start coming in, the negative effects of dilution can be overcome. It all depends upon the revenues, and whether there will be enough revenues to generate profits.
Take CDE, for example. They've done some major dilution recently, but their projected revenues (from silver mining) will eventually more than make up for that.
It also depends upon what the extra shares are for. Are they for the purpose of lining insiders' pockets or are they for the purpose of growing the company? In CDE's case, it's for growing the company. And, although there are some on here that would disagree, I believe that any dilution that PHGI has done is also for that same purpose.
