JB and ZJMY Holding Co (JBZY)

[Stock Farmer]

Share warrants refresher.

https://www.otcmarkets.com/stock/DOLV/news/Dolat-Ventures-acquired-by-China-Based-Battery-Manufacturer?id=155356&b=y

As part of the acquisition the company will be offering to current and future employees based in the Peoples Republic of China the opportunity to purchase new JB&ZJMY common stock units for $0.10 (Ten Cents USD) per share with one warrant attached exercisable for two years at $0.15 (Fifteen Cents USD) for a total of 10,000,000 (Ten Million) units pursuant to a Regulation S offering on a best efforts basis expiring on July 17th 2017.

My translation:
One warrant exerciseable for two years at 15 cents attached to each 10 cent common stock unit purchased by an employee. Total of 10 million units, which means if all the 10 million 10 cent common share units are purchased by the employees and the attached warrants are exercised within two years, the employees would own a total of 20 million shares. The offer is good for current and future employees.

From investopedia,

A company typically issues warrants to investors & institutions participating in a new share or bond issue. The warrant is a "kicker" to sweeten the deal by granting participants the right, but not the obligation, to acquire stock in the company at a set price, by a given date.

Usually, the warrants are priced out of the money, but with ample time before expiration to provide for the possibility that good company performance will raise the underlying share price above the exercise price, making the warrants worth exercising.

From wiki,

Stock dilution. ... This increase in the number of shares outstanding can result from a primary market offering (including an initial public offering), employees exercising stock options, or by issuance or conversion of convertible bonds, preferred shares or warrants into stock.

My translation,
Warrants when exercised cause dilution since they increase the OS and come from the company's treasury. I am not sure if the 10 common stock units come out of JB&ZJMY's treasury. I think they probably did/do pursuant to Regulation S which could account for the OS increase of about 7 million were purchased by employees. I'm not concerned with the 10 or 20 million shares of company dilution through their employee share offering/warrants, it is a drop in the bucket and adds employee long investors to the company, who will probably buy more existing outstanding shares to add to the core.

https://valuestockguide.com/all/stock-warrants/

Difference between Stock Warrants and Options

If you have stock options awarded to you through your employer, you have the basic idea of how these options work. If you invest in publicly traded options then you have even better idea of how the options work. Warrants are similar to the options, but with one critical difference.

Just like an option, a stock warrant is issued with a “strike price” and an expiration date. The strike price is the price at which the warrant becomes exercisable or “in the money”. Both the warrants and the options eventually expire, if they are not exercised by a certain date.

The Key Difference Between Warrants and Options

Publicly traded options are created by the exchanges and are backed by the stock that already trades in the secondary market (the stock that is already issued that most of us buy and sell – as opposed to the primary market stock issue such as an IPO). When a Call Option is exercised, for example, the required amount of stock from the secondary market is purchased at the strike price.

Stock warrants on the other hand are issued directly by the company and they may trade on the exchanges or over the counter. When a warrant is exercised, the stock that is purchased upon exercising the warrants needs to be issued new by the company. These are not the shares that trade on the secondary market.

So you can see, exercising an option has no effect on the total number of common stock shares outstanding, whereas exercising a warrant increases the total number of common stock shares outstanding.

Stock warrants can also be long term, expiring far in the future while the options are typically short term instruments, expiring within the year (LEAPS are long term options but they are typically only available for a few selected stocks).

If you own common stock in a company that also has warrants outstanding, any exercise of the warrants will increase the number of outstanding shares thereby diluting the existing shareholders. This dilution is more pronounced when warrants are exercised, compared to say, the company issuing new shares on a follow on offering since any follow on offering is typically done close to the market price of the shares, while the exercise of the warrants are typically done below the market price of the shares.