Alto Ingredients Inc (ALTO)

[Rule_62]

Start with this commentary in the earnings PR:

"Fair value adjustments for the first quarter of 2013 were $35.8 million due to the significant increase in the price of the company’s common stock during the quarter, and therefore a corresponding increase in the value of the company’s outstanding warrants."

Ok, now go to the CONSOLIDATED STATEMENTS OF OPERATIONS
- look at the number for weighted shares outstanding. That's the number effective Jan 1st 2014 including adjustments for option grants. It does not include the number of warrants subsequently exercised for the quarter.

The method estimates the number of warrants that will be exercised during the year based on share price for the quarter, and then assumes that transaction takes place on Jan 1st.

If the share price remains constant, there will be no subsequent fair value assessment for the warrants.

If the share price goes up, we will see a corresponding increase in the fair value adjustment and the number that will be reported will be the difference between the current number and the increase in the fair value assessment.

If the share price goes down, we will see a corresponding decrease in the fair value adjustment and the number that will be reported will be the difference between the current number and the decrease in the fair value assessment.

In other words, the amount that will actually be reported will be the difference[color=red][/color] between the Q1 number and the Q2 number.

that's my understanding.

If you want more information, I'd suggest you go back to the link to the book I posted yesterday, go to the page number I provided, and start reading. Keep in mind there's earlier discussion in that book on warrants and fair value adjustment, that page is just the start of the discussion of how it pertains to EPS.

Now I don't know about you, but I'm not going to talk about this any more. I'm going to keep it zipped, let the fudsters do their thing, the pumpers do their thing, and return their comments with little more than a nod and a blank smile. I'll happily accommodate anyone who wants to think I believe it's all about EPS. And when the moment is right I'll load the boat.

If you can't change the game, learn how it's played. Just don't let them know you know :)