Dear Scott,
Each warrant will entitle the holder to purchase one share of common stock at a price of $12 per share, subject to certain adjustments. The Warrants will, subject to certain conditions, be exercisable at any time until the fifth anniversary of the date of the prospectus
(Aug 27, 1996), unless earlier redeemed. The outstanding Warrants are redeemable by the Company, at .25 per Warrant, upon at least 30 days prior notice to the registered holders, if the closing bid price per share of Common Stock for each of 20 consecutive trading days immediately preceding the date notice of redemption is given equals or exceeds 200% of the exercise price of the warrant ($24). If the Company gives notice of it's intention to redeem, a holder would be forced either to exercise his or her Warrants before the date specified in the redemption notice or accept the redemption price.
Interpreted:
Buy now at $1-2 per share. Trade this warrant on the NASDAQ all you want until the five years is up. Get out prior to five years if you lose confidence or keep until just prior to the exp date, hoping for a high stock price.
When the common stock price rises to $24 you may be required to buy Common Stock at $12. They can force you to buy if they want to. Your net gain is from the current price of $1-2 per share up to $12 as a market gain.
From $12 to $24 it is like an employee stock option. You buy at $12 when you exercise your Warrants and receive Common Stock at whatever value it is at the time. The Company may or may not exercise their right to force you to purchase Stock at $24. Maybe they won't. In any case, the whole affair has a five year window.
The question you need to ask is "Will the Company make gains before Aug 2001?"
That's the bet I have made. I will continue to buy warrants until I control around 10,000. I am targeting 5,000 shares of Common Stock to balance out the Warrant risk.
Best
Toby Cyr |
