Replies to post #88747 on Expo Holdings Inc. (EXPH)

[Santa Barbara Broker]

I am at a loss as to how it could have been explained more clearly. Reread SB's post...several times if necessary. No wait...maybe in a Q&A format:

Q:But how could a PIPE funder dump shares that hadn't been issued yet?

A: If I am a PIPE funder (or other buyer) and have made an agreement with EXPH to buy 300M shares at say .00005 on 2/1/11. Do I:

A) Wait for 2/1/11 to actually receive and then sell the shares when the dilution has been officially filed, others can see it, and may sell knocking the price down.
B) Sell on 1/31/11 and deliver the shares when they actually arrive in my account on 2/1/11.

B... of course. Zero risk, free money!

Is it legal? Yup! Is it shorting? Technically, yes. But not a short that needs to be covered at some future date beyond the delivery of the shares once issued.

I can not understand why you are making this out to be odd behavior... this is exactly how this is done everyday by PIPE funders. The blame falls squarely on the company for selling unrestricted shares.