Tuesday, July 11, 2017 3:00:30 AM
Let's go back to the source: April 7, 2017 PR.
http://otce.finra.org/DLSymbolNameChanges
I've been saying the warrants are like options. Rereading the Press Release, you appear on point and we can say these key points:
1 - JB&ZJMY offering their employees shares at $0.10 cents per common stock unit.
2 - One warrant(similar to an option)attached to each unit of common stock.
3 - One Warrant is exercisable for 2 years at $0.15 (fifteen cents USD).
4 - Stock and warrant offering pursuant to Regulation S, meaning JB&ZJMY doesn't have register it under the Securities Act (see below).
5 - The share and warrant offering expires July 17th, 2017.
My interpretation.
The Deadline for employees to decide if they want in on the JB&ZJMY share/warrant offering is July 17th. Employees will buy a specific number of common shares at 10 cents. Employees who join(buy the 10 cent common shares) can buy the same number of warrants as they have common shares within 2 years of July 17, 2017. It is a 1 for 1 deal. One common stock unit at 10 cents = one warrant at 15 cents exercisable for 2 years). 15 cent Warrants expire July 17, 2019.
Let's assume PPS is 5 cents a share by July 17th, 2017 (to make it simple). Lets assume the employee buys 100 ten cent common shares. Lets assume the company is not charging a commission.
Back to math story problems, yikes!
Simple example to show comparison with employee who buys on the open market: *in USD.
Employee A buys 100 shares at $0.10/share by July 17th with attached warrants. 100 shares*$0.10/share = $10
Another employee, employee B buys 100 shares of DOLV on open market. 100 shares * $0.05/share = $5.
Price drops to zero. Employee A does not exercise his warrants. Employee B loses less, since he had smaller investment, but both lose.
Price rises to $0.20 USD per share within 2 years. Employee A exercises his 100 warrants and buys 100 warrant shares at $0.15 USD per share (even though price is at $0.20 per share). 100 shares * 0.15 = $15 USD. Total investment for Employee A is $10 (100 shares) + $15 (100 warrants) = $25 for 200 total shares.
Employee B recognizes the rising PPS and not to be outdone buys 100 more shares at the market price of $0.20 per share. 100 shares at $0.20/share = $20 for 100 more shares. Total investment for Employee B is $5 (100 shares) + $20 (100 more shares) = $25 for 200 total shares.
Price rockets to $1 dollar within 2 years. Employee A still pays $25 for 200 shares. Employee B pays $105 for the same 200 shares. Employee A wins big time.
Given 5 cent pps on July 17th, share warrants (Employee A) have the advantage over buying on the open market for a future pps greater than 20 cents. For PPS < 20 cents but > 5 cents, Employee B has the advantage.
Neglecting commission (wouldn't that be nice),
Employee A's break even point is 0.125/share (200 shares * 0.125/share = $25, the investment cost).
Employee B's break even point is 0.05/share.
https://media2.mofo.com/documents/faqs-regulation-s.pdf
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