Is there a 10M $ error in fair value warrants for 06/30/10 Q?
This only affects GAAP numbers, not non-GAAP, so what that means is in 6 months it doesn't matter, good earnings will dominate.
I'm not a finance major, but at one time held 100K shares of LPH so downloaded a few (4 or 5) of the "Black Scholes" calculators.
Based on that, it seems to me there is a 10 MILLION $$ ERROR in the 06/30/10 fair value of outstanding warrants. I could easily match the fair values for all the other quarters, but their value is listed as 2M as of 6/30, which should be 12M, roughly (I'm going off of memory, have it on a spreadsheet on my other computer).
There is a tremendous increase in fair value QoQ if the Q ending 09/30 has warrrants correctly valued, yet the Q ending 06/30 has warrants valued 10M too low. Basically, it shoots EPS in the foot for 09/30 10Q.
Now if LPH corrects the 06/30/10 10Q at the same time as the 09/30 10Q is issued, then the adjustment isn't as severe.
But either way, the day the 10Q is released P/E increases quite a bit - but it could support a PPS of 2.75 at a TTM GAAP P/E of 10 if BOTH quarters are corrected but might drop to a PPS of 2.55 if only corrected going forward (9/30 10Q valued correctly but 6/30 10Q left alone).
Disclaimer: I am not a finance major and could be totally off on this, do your own due dilligence.
All 4 or 5 interactive calculators online or Excel download calculators all yielded similar (almost identical) results, except for minor differences as to whether dilution of shares is taken into account for the fair value calculation where the warrants would all be exercised.
GLTA, I'm still in this stock, but there is uncertainty in the next 2 Qs trailing 12 months GAAP earnings. Sooner or later though the warrants expire and if one Q is down then the next is likely to be up for the reverse reason when warrant valuations changed opposite to PPS changes.
AI
