Applied DNA Sciences Inc (APDN)

[ckuratz]

Pasta...Thanks for the information. I input some values in the Black-Scholes calculator and derived a similar valuation for the warrants.

Therefore, consider this scenario. First for simplicity assume that the strike price for S-1 shares = $6. You participate in the S-1 and receive X shares. If the market is cooperative and you sell X shares back into the open market at $6, you have neutralized your purchase and have no risk. However, now you are the proud owner of Y warrants (where Y=X) which will be traded as APDNW on the Nasdaq. I have no idea what the valuation for APDNW. It might be as high as $4 but I doubt that it will be this high initially. For someone to purchase your warrants at this price in the open market, he will have to presume that the stock value will ascend to $11.50 (strike price of warrants of $7.5 + APDNW price) over 5 years. Regardless, there will be some immediate value attached to APDNW and this will be your profit (again at no risk) from participating in the S-1. Make sense?