Replies to post #24914 on Alto Ingredients Inc (ALTO)

[Waterloo85]

heber,

That is the exact opposite logic of what I think will happen. In the case where you feel the stock price will decline or overextended you exercise and cash out. Right now with the market fundamentals, exercising sooner than you have to is a waste of time premium and also a waste of cash. Your delta remains the same but you need to put down the cash or sell the position immediately. Q1 had a number of warrants expiring hence the exercising. The remaining options have some time left to go on them. I have options for the firm I work for that are deep ITM and have 7 years left... why would I exercise them... only if I felt that the prospects for the company were negative.

[researcher59]

Hebercreeper: I'm wondering how the accounting handles the warrant exercises. Right now there's a $32M warrant liability on the balance sheet that's adjusted quarterly. Once the warrants have all been exercised it will be down to zero.

So just hypothetically to clarify the accounting treatment, regardless of the stock price on June 30th, if the warrants were all exercised, it seems that there'd be a $32M income credit (to wipe out the balance sheet liability) as well as the cash inflow from the exercises and an increase in basic share count. Is that how it works ?