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Short Interest on warrants may be 'holding off' on taxes
I expect the large short interest showing on the warrants, over 140K warrants, is the result of anyone being short the stock, which then got converted into short the warrants those shares got converted into.
One reason someone short the stock, and now warrants, could want to hold off on closing out the position would be to put off paying any taxes due on the profit. If that is the case, someone short could put off paying taxes on the profit would be able to do it until tax year for 2022, when the warrants will expire (or all have to be exercised).
A retail investor would probably not want to do that since the margin requirements on the short would be so high, and cash left unused, that it probably not be worth it for them.
Louis J. Desy Jr.
No HYCT yet
I have an order in but it is not posting. When I have time I will see what the trading desk can do but I expect it will not be much better. For the moment it looks like trading in the common is very well impossible for any outsider.
Normally, even with thinly traded shares, you would see a bid and ask prices plus the number of shares.
As an example of this SGER. Normally the bid and ask is something like $0.01/$0.02 with 10,000 shares on the bid to buy at $0.01 and 10,000 shares on the ask to sell at $0.02. (Side note, the spread on these stock is simply awful, 100%, but if you want the shares that is what you have to bid up.) The 10,000 on each side is the market marker, so in this example there is no retail as the next best price to execute a trade on. At times I have 'walked' the bid or ask prices and then done a trade. To do that you put in an order for more than what the market marker is doing, look to see that your order is the best price, and then change the price up or down and see if you are moving the price. At some point you will go too far and the market maker will 'step in' and make the best offer. Then you know the best price you could get to sell or buy those shares.
Louis J. Desy Jr.
HYCT Delisted but may trade in the grey market
Sometimes, even though a company may be delisted there may be a grey market that still runs in the shares:
Grey Market defined
As an example, the mining company 'Original sixteen to one mining company' has the stock symbol OSTO but the shares trade on a company run market where people have to contact the company to buy or sell the shares but the results seem to get reported into the online systems. While the company still operates, gives tours of the mine and puts itself out there as one of the oldest mines in the US, it is basically mothballed for all practical purposes. (Although if there is a large rise in the price of gold then maybe they may begin some operations again.) There is also an annual report that people can get if they write to the company. That company is one example of a company trading in the grey market.
Louis J. Desy Jr.
My confusion on the 25%
I missed that part. Just before I read this message I did download the FY2019 Q2 for West Kirkland and saw that part of the language and did start to wonder if they still held any of that project.
What does HYCT still hold then?
Louis J. Desy Jr.
Going public
Well, if (when?) they go public then none of this should be any problem. The 'trade' here is trying to figure out if the warrants have any value at $0.05 per warrant. If a case could be made for the common trading above the exercise price, then the warrants could be a low cost way to get in on the company going public.
I am somewhat surprised with the limits on exercising the warrants. It is the first time I have ever seen anything like that BUT I also was not expecting to be able to buy any warrants through the regular online trading system.
Louis J. Desy Jr.
Not saying valued at $0.0001 per share
I think you misunderstand what I am saying.
Yes, the last trade, for whatever reason, is listed as going off at $0.0001 but I am not sure why plus since nothing is showing on the online order book it is impossible to get an order to process for that price.
The problem is that it looks like it is impossible for a retail investor to get any order to process at any price.
I did see if I could get at least something to show for a price and number of shares on the bid and have not been able to do so, so far.
Part of the problem with trying to do that is that since the systems are listing the last trade at $0.0001, most brokers will only allow an order to be put in that is within a certain percentage of the last trade, so I started out with an order to buy at $0.0001 and have been raising it by $0.0001 at a time. Currently the order to buy is up to $0.0005 and each day I am going to raise the bid up and see if anything happens.
What I would like to do to get one share would be to put in a bid at something like $10 just to get a share but I can't do that yet.
Louis J. Desy Jr.
Market cap
It looks like the market cap is showing so low is because the last reported trade was $0.0001 per share.
In theory it should be possible to exercise the warrants, even with the common shares lower than the exercise price; BUT some of the language on the new issued common and warrants have restrictions on their trading. One section on the warrants even seem to give the company the right to decline to allow the warrants to be exercised if it would increase the number of common shareholders.
The best outcome would be if something happened where the company wanted the warrants to be exercised so they would get more paid in capital.
One of the prior postings with the Canada Sedar document has sections in that which say how many shares and warrants there are plus the amount of first lien and second lien notes.
I did note from that filing that it does not look like the company left the Chapter 11 with much in the way of cash, it looked like something on the order of only a few million.
Louis J. Desy Jr.
Louis J. Desy Jr.
Exercise Warrants that are out of the money
While it may not make any sense, normally, to exercise a warrant that is out of the money, there is a reason to do it here. Without being able to buy shares of HYCT directly or from another holder of HYCT common shares, the only other way I can see to get at least one share of the common shares would be to buy some warrants and then exercise one of them. That is what I was trying to do on Thursday when I bought 101 warrants at the ask. My plan was to exercise one warrant for one common shares and then get a copy of the financial statements. After that I could see if I wanted to buy more warrants or just hold onto the 100 of HYCTW. It also would give an idea as to how much HYCT could take part in the project it owns 25% of with West Kirkland Mining (WKLDF).
Once you have a share of the HYCT common, then you can get a copy of the financials, see what the numbers are, and have some information to value the common which then can be used to value the warrants.
While the warrants are out of the money, one should be allowed to exercise them and get common shares if they want to, in spite of the fact that it may not make any sense in that the common trades for less than the exercise price.
If a brokerage firm will try to exercise a warrant but objects on the basis of the common being less than the exercise price, I would recommend telling them that you know that but you are looking to get some common shares so you can get a copy of the financial statements and then be able to value the warrants. As far as I know, there is no rule or law that prevents someone from exercising warrants to get common shares when the common shares are less than the exercise price.
Louis J. Desy Jr.
Other thoughts on HYCT and HTCYW
1: I am not sure it will be possible to 'force' public reporting if there is no way around the restrictions on who can buy common shares or exercise warrants since there may be no way to get the number of common sharesholders to increase.
2: One way to come up with a value as the project is to look at West Kirkland Mining (WKDLF) since they own 75% of the project and HYCT is 25% of the project and see about West Kirklands presentations and market cap.
3: It is possible, and something that I am expecting, most methods of valuing the company or the project will not take into account if there is a sudden rise in the price of gold, on the order of something like over $2,000 or even $4,000 per oz depending on what happens with US debt and US government debt. It is possible that the US will have a currency crisis and a debt crisis at the same time and gold would skyrocket in terms of USD. In that situation people within the US in USD would benefit, as far as HYCT and HYCTW is concerned since what would really be happening is not that gold was going up in price, by the US dollar was falling and this shows up by gold rising in USD. That scenario could be checked to see what the price of gold was doing in other currencies. (As a note, over the long term I expect all currencies to fall at varying rates against gold, which will show as gold rising in each currency. If you find a currency where gold is not going up in price then that may be a truly stable currency.)
4: People that had old ANV sahres converted into HYCTW may want to look at selling the HYCTW, waiting more than 30 days, and then rebuying the HYCTW. While the bid/ask spread is not good, the benefit of selling and then rebuying is that anyone in that situation could declare the loss on this years taxes, and still have the same holding with the benefit of getting a refund on part of the losses this yeaar.
Louis J. Desy Jr.
Exercising warrants - How?
If the warrants can be exercised without a special event, can you tell me how?
I bought 101 HYCTW at the ask on Thursday. That was no problem and I was able to do it through the regular online trading systems.
I then tried to see if I could exercise one warrant so I could get at least one share of common and be allowed to get a copy of the financial reports through the company web site.
Normally, I would expect the process would be to inform my broker that I wanted to exercise a warrant, pay a fee to do this plus the exercise price, and then get the shares(s).
Instead my broker told me the warrants have no terms in their system so they can't exercise them for me.
I looked more and apparently the warrants have special conditions on when they can exercise. The common shares also have restrictions on who they can be sold to.
The company appears to have these restrictions on the common shares and warrants to avoid going over a certain number of shareholders and being required to file public reports again.
The online systems do report some trades in the company common shares, but I am not clear on how this is being done and appears to be some sort of limited market for the common shares but the price and volume do get reported for the online systems.
Again, the common shares show zero shares on the bid, zero shares on the ask with the bid and ask prices as zero.
When I get a chance I will have my broker call the trading desk and see if something can be done that way to buy the common shares.
Louis J. Desy Jr.
Warrants exercise
The documents that I can find about the warrants specified that they can only be exercised under certain events.
Hycroft Common and Warrants
Louis J. Desy Jr.
Common shares
As far as I can tell from reading the various reorg plans, it looks like at least one note series was issued common shares in the reformed company with the amended reorg plan #5. At the same time warrants were issued to the pre filing common shares and those shares cancelled.
Louis J. Desy Jr.
First gold pour soon
Any day now the company is supposed to pour its first gold, the results of batches of ore from the leach pads.
Louis J. Desy Jr.
Recent Presentation
I was surprised to see in the July or Aug 2019 presentation that the company seems to be advocating waiting until gold if $2,000 or more per oz. they also talked about GIG, Gold in The Ground; basically making the argument that having a share of this company is a lower cost of gold ownership than other forms, assuming the amount of gold they think is in the property is really there.
Louis J. Desy Jr.
Warrants trading
I was surprised to even find out there are symbols for the common (HYCT) and the warrants (HYCTW) .
I put in an order for both. The HYCT seems to have no market at all BUT I am told by my broker that they could place a call to the trading desk and they would find out if there was any market.
The warrants, HYCTW, does trade and can be bought or sold through the regular system just like anything else. I was able to get some warrants by putting in an order near the start of the day at the ask $0.1198. The thing that can't be done right now is to exercise the warrants. My broker says they have or see no terms with the warrants so they have no way to go about exercising them, plus some of the filings indicate the warrants can only be exercised certain conditions.
I also have an order in for the common shares (HYCT) but it is not going through to the automated system. I was worried about the online site showing the bid and ask prices as zero, and the shares on the bid and ask as both zero. Normally when a stock shows like that you can't put an order in, plus it showed the last trade at $0.0001 on Aug 01, 2019 at 10:33am. I was able to put in a bid at $0.0001 for 100,000 shares, and the system took it, but it does not show on the bid/ask still. I was able to raise the bid by going up a $0.0001 at a time and have the bid price up to $0.0005 right now.
I think it might be possible if the bid was high enough to get a few more shareholders and get over the 500 shareholder number to get the company to start having to report again. Once that happens then things CAN start to happen for the company and the common shares and maybe even start to drag the warrants along as the price of the common shares start to trade and hopefully rise in price.
Other places seem to indicate that the warrants are good until 10/2022 and the exercise price is around $8.42, but I have not found anything 'official' to confirm this.
I had hope to exercise a warrant to get a share of common stock, which then would allow me to get a copy of the financials. Part of the reason I want to do that is because they are 25% owner in a mine with West Kirkland Mining and if gold prices rise, I expect they would be either need to be bought out or contribute to getting that mine going.
There is also another mining company nearby, Tonopah Divide Mining Co (TODM). I ran across then years ago, and thought they were completely 'dead' since they have no web site, little written and publish nothing BUT I found an email address on an old posting, sent an email, and got a current annual report a few weeks later. So it appears TODM is more 'mothballed' waiting for gold prices to go up. So they have some rights in the same general area and West Kirkland is paying them $75K per year and, if memory serves me correctly, there are rights that would raise that to something like $225K per year. Again, I would view as revenue being generated on TODM rights in the area to be an indication that HYCT and HYCTW would have some value. The problem is that without more information and a management discussion it is impossible to tell how much value or what gold would need to go to before the value started to show.
Louis J. Desy Jr.
Louis J. Desy Jr.
SEC delinquent filers
I am not so sure of that.
There are other companies that have not filed in years and the shares are still trading.
As an example, these companies all appear to be totally gone, no assets and not even a corporate charter in some, but the shares still trade
BDGR - Black Dragon Resources, kept
OMDA - OMDA Oil and Gas
MAHI - Moarch Avalon Publishing
Note that MAHI did properly file a form 15 to stop filing and paid a liquidating dividend; the other two were some kind of pump and dump routine where one of the CEO eventually ended up in jail on other things.
It is strange how some companies can trade for years, even though the company is long gone and/or liquidated; but other companies once they fall behind get a trading halt.
Of course, with BKKN, there always seemed to be something strange going on and I seriously question of the oil rights and/or cash they claim they had was ever there.
At one point the company claimed it needed time to bring their repporting up to date, but the only thing they had one of the books at that point was mostly cash in a bank account, but it still took months to file the reports, none of which made any senses.
Any then there was the whole series of lawsuits and the Chapter 11 filing that got withdrawn for the company.
Louis J. Desy Jr.
Warrants exercise
I took a look at the warrants, and even bought some yesterday.
Since the financials are limited to common shareholders, and not warrant holders, my plan was to buy a warrant, and then exercise the warrant so I could get a common share.
As a side note, the common does have a symbol, HYCT, but nothing trades in the automated system; there are no shares listed on the bid or ask, even though I have an order in to purchase.
The warrants have some kind of special language in that they are only allowed to be exercised in a special or liquidation event. Part of the reason is to avoid going over 500 shareholders and being required to file.
While I can understand that I can not understand why the company just does not go 'grey' and file reports that are just not at the level of SEC reporting.
The other interesting items is that it seems the main mine project is 75% owned by West Kirkland mining (WKLDF) and does trade. The only problem is they recently out out a presentation where they stated and seem to advocate not doing anything until gold is over $2,000 per oz. In the presentation they put it out there as GIG, Gold in the Ground, and estimate that their way is a lower cost way to 'store' gold than what one would pay to store physical gold. They also like the fact that the project is un the United States so there should be a lot less geopolitical risk to any mine.
Louis J. Desy Jr.
SEC Suspension
Well that does not look good.
It looks like the first step in the road to something worse than 'no bid', not able to be traded at all.
Louis J. Desy Jr.
Is the company even real? Why behind on the filings?
Is this company even real? Why is the company so far behind on its filings, plus what was this whole trip through the bankruptcy court about?
As near as I can figure, the people who did the filing didn't have the authority to do so in the end, so it got withdrawn.
How can a company that is nothing but a bunch of oil rights, cash in the bank and collects royalties be months behind in its filings? It is not like the guy in charge, Holmes?, would have to do any work, he would just pick up the phone, hire a law firm and a CPA firm, have them prepare the filings and show up to sign the filings.
I wonder if one of the people involved is up to their old tricks of where there is really nothing here, or nothing left, and refuses to file anything so no one can see that.
For the record, I seem to remember one of the principals, back in the 1980s or 1990s, of the company was involved in an incident years ago where they had some oil right and contracted for the drilling and in the contract asserted that they had the funds for pay. (Somewhere there is an earlier postings there is a link with filings in the case). After a while the company doing the drilling demanded payment and/or proof of funds but the person never came across and eventually stopped work. What that looked like to a lot of people is the guy through there was oil on his pil rights and faked that he could pay for it, and thought 'when' they struck oil they would be able to pay for the drilling out of the sucessfull drilling. Of course, they didn't strike oil in time and the drilling company wanted its money.
Now, there was a big sale of oil rights for cash, allegedly, but for some reason there is always all kinds of strange problems; long delays making filings, some kind of absurd buying of a small oil right for like $70K, a lawsuit as to ownership of a lot of shares and the company, the bankruptcy filing that got withdrawn.
Louis J. Desy Jr.
I am looking
I am taking a look here after hearing about this from a podcast, QTR. It looks interesting.
The big variable is what happens with the price of gold. For whatever reason, the price of gold seems to have started to move up this year.
I noticed in their presentation a NPV at the higher price of around $900 million. Based on a current market cap of around $200 million the stock should move up.
The big obstacles are that the project will require something like $400 million to start, plus the company is projecting a year or two of losing $10 million, so someone is going to have to fund this to get the value.
The ideal situation, I think, would be for a large company to do a merger in an all stock deal at a premium to the current price.
Louis J. Desy Jr.
I can do the case pro se
I do not need to hire a lawyer.
I am fully capable of filing such a case myself and doing discovery.
Since this is the third or fourth time they have run the rountine (new product or service, issue all kinds of decorative common shares until the stock for no bid at $0.0001, then reverse split the existing shareholders to nothing and run the routine again after most of the current bag holders have moved on)
If course, since everyone that bought shares must have suffered large losses, one has to wonder as to why anyone would say anything positive about the company management.
Louis J. Desy Jr
I am sure it will get to a dime someday
Once they do another reverse split to wipe out all of the existing shareholders.
This will be the third or fourth time running this routine again.
One thing I forgot about, is that I own shares and have for a while, maybe I could file a derivative shareholder lawsuit and claw back the money that was wasted or the decorative shares issued into the market onto the muppets.
Louis J. Desy Jr.
Don't worry - no bid 0.0001 on the way
Hey, are all those people around talking about how the 'locked up shares' will never hit the market still around?
I took a look and see that the 2,000,000 shares (2 billion pre reverse split) are now showing like 53 million or 59 million? (Pre split that would be like over 50 billion new shares issued.)
I also saw the price dropping to three decimal places, soon to be four with an eventual no bid at $0.0001.
Of course, once that happens they will just reverse split the stock something like a 1:1,000,000 and completely clear out all of the existing common shares, and then go find another story to run.
There seems to be an endless supply of muppets to pile into things like this? Where in the world do they get their money for investing? Investing is hard enough when one makes a rational choice as to what to buy or sell, or must be a shear disaster when one treats the buying of a stock like playing the slot machines are the casino, with the same end results.
Louis J. Desy Jr.
BKKN Chapter 11 filing
I had a chance to look more at the case.
I downloaded the documents from pacer and through RECAP, the important ones are available to anyone. The link is here:
Recap listing for BKKN bankruptcy case
The important document is number 110, which is the statement of financial affairs.
The company filed December 2018, and just within a few days, had the Chapter 11 dismissed.
It looked like there are all kinds of lawsuits going on with the company listing 8 in the filing, plus all of the litigation around the Chapter 11 filing.
The company has $5.3 million in assets and about $1 million in liabilities.
The assets has about $1 million in cash, $1.9 million in oil and property rights and the rest in prepayments.
The company went into the filing owning a few hundred thousand in legal fees.
Revenue for the last three years was as follows:
2016 $800K
2017 $1.7 million
2018 $1.9 million
Apparently, whatever was going on, the company and everyone else came to some kind of agreement and the company filed to withdraw the bankruptcy.
The problem is that almost all of the cash is now needed to pay bills, meaning the company will have to start selling off assets to keep going.
There is also the problem in that the company seems to have been unable or unwilling to file its reports for a number of months, even though it only mostly owns oil rights and has little to no operations.
Louis J. Desy Jr.
What happened?
I have not been around in a while, but I am surprised that BKKN filed chapter 11; especially since they had almost no expenses and just a pile of cash in the bank.
Of course, there was that whole strange set of deals going on and I did wonder if the cash really was in the bank.
Anyone pull the chapter 11 filing?
Louis J. Desy Jr.
Never thought it could happen to Sears
I thought for sure that they would not file bankruptcy until after the holiday season, but it looks like things are so bad off that it is the only way to get through to 2019.
It is hard to believe that a company like Sears could have fallen so far. I remember in the late 1970s/early 1980s people were talking about Sears as being 'the only place a person would need to shop'. There was even talk about Sears going into financial services and being able to offer mortgages.
I remember reading "The Big Store" by Donald Katz in the early 1990s about Sears and some of the changes that had been going on and one of its transformations.
The opening scene is impressive. Basically, two VP at Sears were competing for one of the top slots, so a meeting is arranged at a private airport, I think in Colorado. Each VP flew in from opposite ends of the country, on their own personal COMPANY provided jet. When I read that part, it was like 'WOW', this company is really making all kinds of money.
Louis J. Desy Jr.
Some vendors trying to get goods back
Did you see where Whirlpool filed to get goods delivered with 45 of the filing returned to them?
The justification was that SHLDQ was insolvent when the order and delivery was made, so Sears should return the goods and not get to sell them.
Louis J. Desy Jr.
P.S. I am expecting an eventual Chapter 7 ending for Sears. Even without any debt or interest payments, they still lose money. Any debt that got converted to equity into a 'NewCo' would continue to have the value of what it has in Sear shrink.
What about the Good Gaming shares that CMGO owns?
What about unloading a bunch of the Good Gaming shares onto the retail market that CMGO owns?
If Glenn can dump enough of them, CMGO might be able to pay the judgement.
Louis J. Desy Jr.
Spike in volume?
Maybe Lakken trying to prop up the stock price like he use to with buying in the last few minutes with that other person's online brokerage account that he had access to?
Louis J. Desy Jr.
Is that bad that CMGO lost the case?
So I assume it is bad that CMGO lost the case, plus has to pay damages on top of that?
Good thing CMGO delisted so no one can see how much they have left to pay for anything!
Louis J. Desy Jr.
I found out why production seems so low.
I thought all of the production was in the State of TX. The State of TX production results is only for one well, out of something like 10 to 12 wells company wide.
The other wells are Kansas.
Louis J. Desy Jr.
They have to do another reverse split someday
Once the stock hits $0.0001 and stop trading, they will have to do a reverse split to get trades going again.
The company already has seen the stock go 'no bid' at $0.0001 with nothing trading at least three times in the past.
Louis J. Desy Jr.
Looks the same situation
I checked the quotes and AWRY is tradable with 200 shares on the bid at $103.55 and three shares on the ask at $175.
It looks like they stopped reporting totally, so they are just a 'pass through' like DMRR.
I have no idea why the parent does not just do a buy out and merge them into the parent company. It seems like there are extra expenses maintaining the separate company and keeping track of the dividends and everything. The parent could just do a stock merger, make the subsidiary part of them and the shareholders just get shares in the parent. Everyone would be happy and things simpler to keep track of.
Louis J. Desy Jr.
Reverse splits are usually bad
Reverse splits are almost always bad. Companies do them because the price is dropping and they can't keep the NASDAQ listing that requires minimum price of $1 or higher per share, so they reverse split to get the price there.
The only other time I have seen a chart so bad was HMNY, did a 1:250 and within weeks the price was back into the pennies.
Louis J. Desy Jr.
So there was something there!
I thought the company was completely gone, but it looks like there was 'something' there.
Louis.
Any idea when the liquidation will post to accounts?
Louis.
Another RS soon? No! I can't believe it!
I am shocked.
I did take a look, and pre split, the company would have something like 23 billion shares, and the price is crashing back towards $0.0001 post split.
Don't worry, after this goes 'no bid', They will run the whole cycle again!
Louis J. Desy Jr.
I looked at status in Florida
It looks like the company stopped filing its corporate charter. The charter was administrative dissolved September 2017. While it is possible that the company could pay the fees and refile, it does not seem likely.
Louis J. Desy Jr.
Too risky
I do not mind the volatility, the problem is that over time good news had less of an effect than in the past, plus the long term trend over the years has been down.
At the start in 2012 the expected recovery was somewhere around a few hundred million, now the most recent estimate I did was something like 20 or 30 million; plus every year more and more shares come onto the market.
Louis J. Desy Jr.