Penny...in the way of a EXPH example here give me some latitude. If I drove up to you in a Buggati Veyron would you automatically assume I had the pocket change to pay $1.7M+ for a completely impractical vehicle, or might you be tempted to guess I may have leased it for the day to impress someone?
EXPH has three factors at work here (IMHO) that combined completely take the mystery (or moreso the need for mystery) totally out of the equation. To begin with, I believe JD Brown was a struggling cabinet maker who couldn't make ends meet, was way over extended and on the brink of bankruptcy when this opportunity to go public and live a carefree life presented itself. That explains the D&D equipment and buildings and everything else being all set up to produce the cabinets from the get go. Then it was just a matter of forming the plan and executing the following:
1) The principals did not found the current public company for the purpose of earning profits. They set it up to provide a source of income and perks for themselves, their friends and their families in an environment where money would never again be a problem.
2) Because there was now no need to earn profits, the amount of money they spent to take over D&D's leases on tools, operating equipment and buildings was irrelevant up to and including the point where it satisfies the need to appear legitimate and successful to those who are critical to mislead...i.e. the investors and the state and federal regulators.
3) The company now has a near endless source of low cost/no cost operating capital...the people who buy their shares...dependant on some easy to manipulate factors. They also have an endless source of capital to reward their friends and family providing them with a temporary source of bridge capital...shares. Beyond the cost to license and register the issue of these shares, they can continue to lose money and appear to be a big classy organization forever. Those factors necessary to manipulate being that 1) people continue to be fooled by their con artistry, 2) people continue to buy their shares and 3) shareholders continue to approve their A/S increases or R/Ss. The latter becoming easier as they distribute these huge PPs just prior to the time an A/S increase or R/S would require majority shareholder approval. Following the crutial approvals, they dump their shares. Voila!
The whole thing is excrutiatingly simple to understand and makes complete sense. No wild theories. No cloak and dagger share manipulation. No deep dark MM manipulation and wash trading. Just good old straight-forward American greed and scamming. It is only when people go off on these wild and incomprehensible tangents trying to fit square peg after square peg into round holes in an effort to connect 50 unconnectable dots to form one crazed premise to defend the indefensible that the problems with reality start to spring up. EXPH being a complete scam is much easier to explain as a 100% cohesive package down to the very last and most minute detail than EXPH is to explain as a legitimate business concerned only with earning net profits from any single perspective at all. "Entities must not be multiplied beyond necessity"...Occam's Razor. The simplest explanation is most often the correct one. See it. Learn it. Be one with it. EXPH is a scam. All IMHO.
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