I like the deal better than the 50c shares with 1/
Post# of 154851
(Total Views: 354)
Posted On: 05/14/2019 5:17:46 PM
I like the deal better than the 50c shares with 1/2 a warrant before. It also rewards old private placement investors they started with $1+ warrants (though I am ready to reward all shareholders and not just paulson investors)
To raise say 10 million they need available 20M shares + 10 million warrants = 30 M new shares from the Authorized Shares. At the current share price they would probably have to do 40c+ 1/2 warrant, which would be 25M shares +12.5 M warrants, 37.5M shares.
Since the warrants are already counted in the previous Authorized Shares, to raise $10M they need to have 25M warrants exercised (already in the Authorized) + 12.5M new shares.
So 30-37.5M new shares needed from authorized with old method vs 12.5M new shares with the new method, with the added bonus we clear up the warrant overhead.
Now doing this though will probably have the share price linger in the 40c range until some selling of old shares is cleared. Why?
Suppose you have 100k shares + 100k warrants (maybe at 50c). You could exercise the 100k warrants for $50k, giving 200k shares for $50k. Though at the current share price it would be better to buy off the market at 42c.
Anyway, you could sell the 100k shares for $42k, wait 30 days to avoid wash rules, taking the loss with those old shares to go against any other gains this year. Then take the $40k to pay to exercise fee on the 100k warrants, they then would give you 50k bonus shares.
So before you had 100k shares + 100k warrants,
Now you have a loss on the old shares to go against any gains this year
+ 150k total shares and $2k in additional cash with no warrants
The one issue is it would reset capital gains on selling your new shares, you would have to wait another year to get taxed at the lower rate if cydy hit it big this year. So maybe not cash out all your old shares they you have held over 1 year. But if I had the warrants, that would possibly be my strategy.
To raise say 10 million they need available 20M shares + 10 million warrants = 30 M new shares from the Authorized Shares. At the current share price they would probably have to do 40c+ 1/2 warrant, which would be 25M shares +12.5 M warrants, 37.5M shares.
Since the warrants are already counted in the previous Authorized Shares, to raise $10M they need to have 25M warrants exercised (already in the Authorized) + 12.5M new shares.
So 30-37.5M new shares needed from authorized with old method vs 12.5M new shares with the new method, with the added bonus we clear up the warrant overhead.
Now doing this though will probably have the share price linger in the 40c range until some selling of old shares is cleared. Why?
Suppose you have 100k shares + 100k warrants (maybe at 50c). You could exercise the 100k warrants for $50k, giving 200k shares for $50k. Though at the current share price it would be better to buy off the market at 42c.
Anyway, you could sell the 100k shares for $42k, wait 30 days to avoid wash rules, taking the loss with those old shares to go against any other gains this year. Then take the $40k to pay to exercise fee on the 100k warrants, they then would give you 50k bonus shares.
So before you had 100k shares + 100k warrants,
Now you have a loss on the old shares to go against any gains this year
+ 150k total shares and $2k in additional cash with no warrants
The one issue is it would reset capital gains on selling your new shares, you would have to wait another year to get taxed at the lower rate if cydy hit it big this year. So maybe not cash out all your old shares they you have held over 1 year. But if I had the warrants, that would possibly be my strategy.
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